January 24, 2018                                                                                                                                              Volume 14 - Number 1
In This Issue
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 CalTRUST Update
CalTRUST Webinar Available Online

Last month, CalTRUST hosted a market update and total return webinar.  The webinar focused on a m arket update post the Fed's December meeting and announcement, the i mpact of a Fed rate hike on the portfolios; and a d iscussion of total return investing strategy. If you were not able to join us for the webinar, you can CLICK HERE to view it online! 

Year-End Account Updates

As we enter the new year, CalTRUST would like to ensure that your account information is up-to-date.  Please login to your CalTRUST account online and click on the "General Information" tab to review your authorized individuals.  If you need to complete any updates please download the participant agreement and complete only the sections that you need updated.  If you need any assistance logging in or with account updates please contact Kyle Tanaka. 
Laura Labanieh
(916) 650-8186; laura@caltrust.org
Kyle Tanaka
Member Services Associate
(916) 650-8114; kyle@caltrust.org

Financial Markets Update
Market / Macro Update

Summary: This week Congress successfully passed the largest tax overhaul in three decades and President Trump is expected to sign the bill on January 3rd. Now, legislative attention turns to keeping the U.S. government open. Late on Wednesday, House leaders released a plan that would maintain funding for the government through January 19th. A House vote could come later today, and both chambers have to pass the spending bill before midnight Friday to avert a partial shutdown of the US government. In rates, 2s30s steepened on tax reform optimism. In the US, new and existing home sales came in better than expected and the third quarter GDP was revised slightly lower on weaker consumer spending. 

Tax Reform: This Wednesday Congress passed the tax bill which now heads to President Donald Trump for his signature. Nearly all of the tax changes (such as a decline in the individual's top tax rate, from 39.6 t to 37% and the corporate rate's permanent cut to 21%) will take effect at the start of 2018. 

US 3Q GDP: The third estimate of Q3 GDP contained a 0.1 pp downward revision, and the economy is now reported as having grown by 3.2% versus 3.3% in the second estimate. In the third estimate the revision primarily came from personal consumption, particularly in the services component. However, some of the downward revision in services consumption was offset by spending on goods which was pushed higher to 4.5% from 4.1%. 

Consumer Confidence: In the preliminary reading for January, the University of Michigan index of consumer sentiment edged lower, to 94.4 from 95.9, below expectations of 97.0. The main sub-component that drove the overall index lower was the current conditions index which showcased that consumers are reacting to rising prices for big-ticket purchases, such as vehicles and homes.  

Short Duration Portfolio Positioning: Holistically our duration position remains muted versus the benchmark with a slight curve flattener bias. This week our new issue buys coincided with a mild rate back-up creating a tactical opportunity to add a little interest rate risk and more yield. We optimized our Agency book by selling December 2019 US Agency paper and extending into Jan 2021. We also added International Finance Corporation paper within the SSA sector maturing in Jan 2021 and yielding 2.25%.

Performance (as of December 31, 2017)

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.
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.