Iron Mike Tyson put it best when he said in his unique voice and style,"Everybody has a plan, until they get hit". The same is true with investing.  A well thought out plan coupled with the right attitude will only lead to the greater possibility for success. Being steadfast not stubborn.Not proud but humble and possessing the wisdom to recognize the differences. The markets have been hit with a few stiff jabs along with Joe Frazier-esque left hooks but we’re still standing and just a percent or so from record highs. GSA believes we’re only in round five of a twelve round title fight within the current economic recovery and market rally.We’re keeping our cups strapped on and headgear cinched tight as we’re sure to take a few more hits  while remaining vigilant but confident we’ll prevail as long as we stick with our plan.For now,

To The Scorecards Please:

Leading Economic Indicators-LEI.LEI popped +.6% in April, the biggest gain in a year.The gains were led by average weekly manufacturing hours along with drops in average initial unemployment claims.Overall nine of the ten components registered gains and point to further moderate economic expansion in the coming quarters. 

Housing.Housing starts flashed a solid increase of +6.6% to a seasonally adjusted annual rate of 1,172,000.Separately, single family housing starts were up +3.3% reflecting a 778,000 annual run rate.Also important as a gauge of future growth building permits were also up at +3.6% to an annual run rate of 1,077,000.This sector of the economy continues to heal providing a solid base of good paying jobs.These figures while healthy are being restrained by company’s inability to hire skilled workers along tight loan underwriting criteria.

ISM Manufacturing-ISMM.ISMM expanded for the third consecutive month adding on +.5% from April’s 50.8% to +51.3.The New Orders Index was basically flat -.1% to +55.7%. The Production Index eased off -1.6% to a still steady +52.6%.There was some continued weakness in the Employment Index at +49.7% which was unchanged from the April reading not unexpected and explained by the weakness in the energy sector and mining.Unlike the headline figure which remains modestly positive respondents were practically outright bullish. 1. Food, Beverage & Tobacco,”Business conditions remain strong ex-South America”.2. Chemicals, “Consistent sales growth in Asia, Mexico and Canada flat for America’s and Europe”.3. Fabricated Metals, “Continued brisk order flows for our business.” 4. Wood Products,” Market is improving steadily in both orders and pricing.”  This commentary would lead to expectations for continued growth and expansion in the coming quarters. 

ISM Non-Manufacturing-ISMNM.ISMNM dropped -2.8% to +52.9%, softer but solidly above the all-important +50% neutral growth line.There was a weakening across all sub-indices but all remained comfortably in expansionary territory.Respondents were generally more cautious as well citing weakness in the oil sector, a slow start to the quarter and high pressure on cost reduction.   Overall, respondents did not appear overly concerned just noting some easing from the prior months pace of business and some softening in demand. 

Consumer Spending.Here’s the counter punch the bear camp didn’t see coming.Consumers ratcheted up spending +1% in April the best showing in seven years. Consumer spending accounts for over 70% of US economic growth.Consumers splurged on big ticket items such as auto’s and home improvements.The increased spending was aided by lower energy pricing, improved employment conditions and improving incomes. Incomes held steady at +.4% for the third of the first four months of 2016. 

Where We’re Going:

The markets remain exceptionally resilient as the economic indicators have been positive for the most part but growth uneven. We’ll need to continue to bob and weave as risks remain abundant and constant. A few worth mentioning:

1. The upcoming Federal Reserve meeting on interest rate policy in June and July where a rate hike appears unlikely but still in play.

2. The UK’s vote later this month on whether or not to remain in the European Union (referred to as the Brexit).

3. China taking another attempt at allowing a free floating, market based Yuan exchange rate.

This could result in a severe appreciation of the US dollar, crimping exports, leading to a rolling crash of commodities and related stocks. The positive available data and momentum currently far outweighs the risks. Global central bank policy remains highly accommodative.Current inflation levels and expectations for future inflation levels remain benign. China is Orchestrating a successful soft economic landing.India Prime Minister Modi’s economic reforms have jump started this slumbering giant to one of the fastest largest growth engines overtaking China.Commodities appear to have bottomed.The EU economy is gradually gaining traction.Japan has restrained from hiking taxes which may have impacted the nascent recovery while looking to boost women’s presence and pay in the workforce. In the end the US for all our warts is surely the best house in a bad neighborhood. 

Muhammad Ali transcended boxing and sports leaving a lasting impression. The impact on America and the world was profound. His words of wisdom are even applicable to our domain, investing when he stated, “He who is not courageous enough to take risks will accomplish nothing in life”.So while no plan goes exactly according to plan it is how we adapt and adjust that aides in our successes. With our investments in order to achieve our dreams and goals we must accept risk is present, but manage those risks appropriately.