- The start of the Trump presidency has been marked by good economic data and high confidence, while media coverage has reflected lingering uncertainty
- Rock solid fundamentals — the strongest quarterly earnings outlook in five years — has provided a sustainable foundation
- Despite stumbles, the administration’s pro-business posture, exemplified by a focus on deregulation and tax reform, has been reassuring to markets
- Foreign markets have been robust, as broad global diversification hit its stride
- A surprise outcome in the U.S. elections ushered in a new path forward, and markets worldwide celebrated the promise of pro-growth economic policies with rising asset prices and rising bond yields
- In effect, the markets took the reins from the central banks, clarifying the likely path toward rate normalization — reflation — and away from unconventional monetary stimulus
- The prospect of business-friendly policies also supported a corporate earnings turnaround — potentially higher growth, increased pricing power and higher after-tax net income — a boon to global business
- The paradigm shift will provide unexpected returns — and risks — that may create both positive and negative extremes, making a case for broad global diversification
- The October surprise was not in the presidential election - it was in the bond market.
- Despite uncertainty, slowly rising yields signal economic growth and a path to normal.
- Earnings appear on track for a positive third quarter.
- Markets will need to transition from a yield-driven to an earnings-driven foundation.
- Central banks likely will continue backstopping unexpected risks and normalizing rates cautiously.
- The U.S. and global economies are muddling along without apparent growth catalysts but few observable risks.
- Market leadership has shifted from the U.S. toward riskier asset classes.
- Investors should prudently stay broadly globally diversified to spread out risks and increase opportunities.
- Diversification works in the long run in terms of both risk and return.
- An overconcentration in the S&P 500 is putting all your eggs in one basket.
- It’s always a good time to own bonds.
- In 2016 the diversification tortoise is beating the S&P 500 hare.
- Relative valuation techniques suggest that equities could get more expensive before valuation is a real concern.
- The only way to protect against upside risk is to own the market in a prudent way.
- UK’s currency independence mitigates risk to EU and softens economic blow to Britain
- Despite the low return, low growth world, markets continue to “climb a wall of worry.”
- A stealth bull market has frustrated the Bears as both stocks and bonds relentlessly rise in price in unison sending bond yields to historic lows
- Britain, true to its motto, “Keep Calm and Carry On” has removed a lot of uncertainty as Theresa May takes the mantle of Prime Minister
- Global Central Banks expected to ratchet up monetary accommodation
- Despite the headwinds from negative corporate earnings the consumer remains resilient
- While U.S. markets continue to climb a wall of worry, many fretful investors have missed out as they await the pullback that never truly comes.
- Recent data suggest the consumer will help rouse the economy from its first quarter sluggishness.
- Given the impact that tightening would have on already-elevated global risks, we don’t expect a Fed rate hike this summer.
- Broad, global diversification continues to shield investors from volatile markets, over both the short and long term.
- Increasingly accommodative central bank policies have inspired an astounding year-to-date reversal in global risk assets.
- While rising asset prices haven’t had a meaningful impact on the real economy, there are hopeful signs of a potential second-half 2016 rebound.
- First quarter corporate earnings growth has come in better than expected but is still on track to be negative for the fourth consecutive quarter.
- Despite the lack of robust global growth, all asset classes are positive year to date, highlighting the importance of global diversification.
- Good domestic economic data on top of more accommodative Fed policy served as a double-whammy boost for markets, driving a risk asset rebound after a dismal January.
- Given the global economic weakness, the Fed seems to believe there is greater risk to being early in normalizing rates than there is to being late.
- With nearly half of S&P 500 revenue derived from overseas, weakness in the global economy is showing up in U.S. corporate earnings and is likely to result in a fourth consecutive quarter of negative growth.