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Friday, July 20, 2018
Wide variations in sector returns have generally been the norm; this year information technology and healthcare are the leaders; energy and telecommunications are the laggards.

Economics and politics are not only dating, they are engaged. In the past week, the economic data has been fantastic, yet somewhat boring. In contrast, investors have confronted a myriad of concerns regarding tariff threats, NATO ally spats, Russian frenemy meetings and a president that freely opines on the dollar strength and the Fed’s interest rate policy. Understandably, investor caution has heightened. However, one thing is solid and certain and that is company earnings. Less than 20% of the companies have reported for Q2 but the earnings beats are far surpassing the misses. Earnings growth projections are now up to 22% (Reuters) and revenues are expected to rise by more than 8%. Even the sector earnings laggards (Utilities and Real Estate) are looking at firmly positive growth. More importantly, company forward guidance has been affirming a very strong economic backdrop and earnings trajectory. Instead of being drawn into the relationship theater of economics vs. politics, investors should focus on the stable relationship between company profits and the market. There is plenty of drama to go around on Bravo TV. As always, fundamentals drive markets. The market is poised for another positive week (and Financials are notably rising from the dead) despite all of the drama, speculation and inflammatory rhetoric on the political stage.
Please follow S&P 500 sector performance on page 18 of the Global Perspectives Book.

Weekly Commentary & Statistics

Monday, July 16, 2018

Markets mostly gained for the week as investors bet on upcoming earnings news, ignoring trade tensions and President Trump’s NATO provocations.

Monthly Commentary & Outlook

July 2018

Strong economic news punctuated the first half of the year, yet markets remained mired in struggle. Main Street has been celebrating as the economy has quietly amassed record highs in U.S. wealth, employment and spending.

  • The economy is quietly enjoying a “stealth” economic boom driven by pro-business tax cuts
  • Small business optimism on a “stratospheric trajectory” resulting in robust expansion plans
  • Trade tariff retaliation, rising inflation and a rising U.S. dollar spike global market volatility
  • Strength amidst uncertainty argues for broad global diversification

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