Monthly Commentary

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April 2017
  • 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
December 2016
  • 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
November 2016
  • 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.
October 2016
  • 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.
September 2016
  • 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.
August 2016
  • 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.”
July 2016
  • 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
June 2016
  • 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.
May 2016
  • 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.
April 2016
  • 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.


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