May 2016                                                                                                                                                          Volume 12 - Number 5

Monthly Market Update

In This Issue
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President's Perspective
CalTRUST Updates
As a reminder, effective immediately, Medium-Term Fund purchases and redemptions can be made each Wednesday, with five business days notice. Previously, Medium-Term transactions took place on the last business day of each month. This chance was incurred at the April meeting of the CalTRUST Board of Trustees in response to participant feedback. 
April State Revenue Collections Lag Projections By 6.6% - Potential Warning Sign As Budget Season Heats Up
Stating that "state revenues cannot defy gravity forever," Controller Betty Yee reported April revenue collections came in $1.19 billion below projections underlying the Governor's 2016-17 budget proposal. Noting that it is too early to know if this is a trend or a one-time anomaly, Yee cautioned that the shortfall pointed out the "peaks and valleys" nature of the state's financial performance. While revenues for the year-to-date remain more than 5% above the prior year, April is seen as a possible bellwether of the state's short-term fiscal future, given its importance with regard to personal and corporate income tax filings.

more information on the CalTRUST funds, please contact me by email at the address listed below, or contact:   
Lyle Defenbaugh, Wells Fargo Asset Management            916-440-4890  
Laura Labanieh, CSAC Finance Corporation                    916-650-8186 
Norman Coppinger, League of CA Cities                           916-658-8277
Neil McCormick, CA Special Districts Association            916-442-7887

Chuck Lomeli is CalTRUST President
and Solano County Treasurer
Financial Markets Update
Maybe The Recovery Has Been Only Subpar Rather Than Almost Comatose - Why US Growth May Be Understated


In his latest Economic & Market Perspective, WellsCap Chief Investment Strategist Jim Paulsen examines whether recent US economic growth is understated. He concludes that, while "the contemporary recovery has been subpar" ... "there is a fair amount of evidence to suggest that economic growth may be significantly understated in this recovery". 

As Jim points out, the growth of investment, consumer spending and job creation in this recovery imply a pace of growth stronger than official reports indicate, perhaps by as much as 1% per year. To examine this, he focuses on the long-standing and close relationship between real wages and productivity growth. With the recovery posting one of the strongest gains in real wages during any recovery since the 1960s, Jim asks, "does it make sense that companies would increase real hourly wages at a historically rapid pace if the real productivity of laborers was weaker than any recovery in the post-war era?" 

There is no argument that economic performance in this recovery has been subpar, even if understated in the official numbers. On the other hand, the perception that growth has hovered near "stall speed" since emerging from the Great Recession has produced a recovery focused on fears of recession/deflation risk. If growth has actually been more robust than the headline numbers suggest, the balance of this recovery may be focused on inflation/rising interest rate fears.  
Jim's complete Economic & Market Perspective can be accessed here. 
CalTRUST Portfolio Snapshot (as of April 30, 2016)
1. CalTRUST Short-Term and Medium-Term and LAIF yields are net of fees.  Merrill 1-5 Year Indexes are unmanaged; and do not reflect any deduction for administrative fees or expenses.
2. CalTRUST and LAIF returns are net of all investment advisor, administrative and program fees.
3. Annualized.
4. The CalTRUST Short-Term and Medium-Term portfolios commenced operations on February 13, 2005.
CalTRUST Heritage Money Market Fund


Treasury Yield Curve 


2016 Calendar


July 1 

Independence Day Observed

Early Closure - 10:00 am PST


July 4

Independence Day Observed

Closed for Trading


September 5

Labor Day

Closed for Trading


October 10

Columbus Day

Closed for Trading


November 11

Veterans Day

Closed for Trading


November 24


Closed for Trading


November 25

Thanksgiving Holiday

Early Closure - 10:00 am PST


December 23 Observed

Christmas Eve

Early Closure - 10:00 am PST


December 26

Christmas Observed

Closed for Trading


December 30

New Year's Eve Observed

Early Closure - 10:00 am PST


January 2, 2016

New Year's Day Observed

Closed for Trading


The CalTRUST Monthly Market Update  is prepared monthly by the Investment Trust of California (CalTRUST) for participants in the CalTRUST Joint Powers Authority pooled investment program.  The Newsletter is prepared solely for informational purposes and is not to be construed as the solicitation of an offer to sell or of an offer to buy any security, nor is it intended to constitute a recommendation for the purchase or sale of any security.  The information contained herein is based upon data obtained from sources believed to be reliable, but is not guaranteed by us as being accurate and does not purport to be a complete summary of the available data.  Additional data will be provided upon request. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance.  Information, opinions and estimates contained in the Monthly Market Update reflect a judgment at its preparation date by CalTRUST and are subject to change without notice.  The price, value of, and income from any securities or financial instruments issued by the entities mentioned in this Monthly Market Update may fall as well as rise.