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Daily Blog

Tuesday, May 22, 2018

Amid the trade worries, interest rate surveillance and emerging market/strong dollar stress, investors may be ignoring an extremely important piece of legislation to be voted on by the House today. The Economic Growth, Regulatory Relief and Consumer Protection Act will essentially ease regulations on banks, especially smaller regional banks. When the banking system is restricted, the economy is restricted. Easing up on regulations that were arbitrarily based on asset size rather than risk parameters will unleash economic growth. Small business is undoubtedly the backbone of the U.S. economy. These businesses depend on bank loans rather than stock or bond issuance and lack of financing will keep potential startups in the doghouse. Tax reform already released the hounds of growth and optimism. Accordingly, small business activity has been on fire and this is reflected in small cap stocks with the Russell 2000 up 7% in the last three months. Now banking deregulation is another nice juicy bone to add to the pile. U.S. GDP may have been a little soft in Q1 but it was above trend. Expect higher GDP growth in 2018. The dogs are on the loose.

Please watch U.S. GDP on page 70 of the Global Perspectives book and watch Karyn Cavanaugh discuss the markets on CNBC tomorrow at 6:00 am.

Weekly Commentary & Statistics

Monday, May 21, 2018

Last week investors bid up U.S. stocks, betting that interest rates would stay contained; this week they walked those bets back.

Monthly Commentary & Outlook

April 2018

Growth across the board in employment, manufacturing and business confidence either notched near or surpassed record highs.

  • Economic growth was unleashed in the first quarter – in the United States, China and Europe
  • Markets also were unleashed and volatility spiked on fears of inflation, tariffs and technology companies
  • Tax cuts are a game changer which is not fully priced into corporate earnings
  • Geopolitical risk has fallen with saber rattling replaced by a surge in diplomacy
  • Global diversification is working with seemingly riskier assets ending the first quarter positively

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