Monthly Commentary

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December 2014
  • Heading into 2015, the global economy is on a sustainable growth trajectory despite rampant volatility from plummeting oil, deflation in Europe and growth concerns in China.
  • We’ve built our 2015 forecast employing a multi-faceted framework called TRED that includes four inputs:
    • Tectonic Shifts in Energy, Global Trade, Technology, Frontier Markets and Water are broader, unifying trends driving true change.
    • Rates — inflation rates, central bank policy rates, discount rates, exchange rates — provide a window into the overall economic health of country, region and global economies.
    • Earnings deliver an unbiased view of the strength or weakness of a cross-section of global and domestic companies.
    • Diversification enables investors to pursue a thoughtful, considered investment philosophy focused on prudent investment discipline.
  • Building wealth is predicated on taking risk, not avoiding it. A reliable and an adaptive approach to assessing that risk on an ongoing basis is essential to developing resilience in the face of potentially volatile markets.

November 2014
  • After weeks of struggles, market strength returned quickly in mid-October.
  • The expansion of the BOJ’s quantitative easing program surprised markets and may provide inspiration to central banks in Europe and China.
  • As corporate America surges to all-time high EPS, domestic macro conditions continue to improve.
  • While Republicans took control of Congress with the midterm elections, policy impact may be minimal.

October 2014

  • While the success of the Fed’s aggressive QE program surprised the markets and the central bank…
  • …Europe hasn’t gotten the memo, continuing to dither over the scope of its asset-purchase program as recession and deflation loom.
  • Markets across the globe — with the exception of long Treasuries and domestic large cap stocks — were hard hit in the third quarter.
  • Though volatility has risen, it remains modest; investors should take this opportunity to broaden their portfolios at more attractive levels.

September 2014
  • A hawk in dove’s clothing, Yellen will likely be ahead of the curve when it comes to hiking rates.

  • Winding down quantitative easing and zero interest rates will bring greater market volatility.

  • Driven by strength in manufacturing and a revitalized consumer, corporate America is thriving.

  • The euro zone is an economic basket case, forcing Draghi to reach for another “bazooka” solution, to the likely benefit of risk assets.

  • Broad, globally diversified portfolios can help protect investors against the volatility that policy normalization may bring.

August 2014
  • The U.S. economy is recovering strongly, which will compel the U.S. Federal Reserve (Fed) to withdraw its support.

  • Winding down quantitative easing and zero interest rates will bring greater market volatility.

  • In our view, investors should embrace risk assets within an effectively diversified portfolio on positive economic growth and corporate earnings.

  • Markets ultimately will be free of Fed influence, a positive for sustainable economic growth.

July 2014
  • Markets have looked past the early-2014 economic cold spell as fundamentals heat up and systemic risks wane.

  • European Central Bank bolsters monetary stimulus as the Fed and Bank of England continue tightening.

  • Cold War redux in Ukraine and Middle East instability inspire yawns.

  • Given seven consecutive quarters of S&P 500 earnings growth, we affirm our 2014 forecasts for EPS and price level.

March 2014
  • While recent equity pullbacks have provided under-exposed investors with attractive opportunities to re-enter the market, many remained spooked by memories of 2008.

  • Risk has remained low in a virtuous cycle where good news is accepted as good news and bad news is quickly discounted.

  • Many emerging economies have struggled this year, but they are generally better positioned to withstand a currency assault than they were in 1997.

  • A plan that effectively balances building wealth and controlling risk better positions investors to pursue their goals in all seasons.

February 2014
  • The Fed is handing the baton to back to the markets for pricing risk, sending volatility higher on its path back to normal.
  • Emerging markets health is vital to global growth, as they have doubled their contribution to global GDP over the past decade to nearly 40%.
  • S&P 500 corporations derive half of their revenue from overseas; global consumerism and manufacturing provide ongoing support.
  • Broad global diversification across equity and fixed income markets is the best way to protect against volatility.
January 2014
  • While the U.S. market was dominant in 2013, broad global equity diversification contributed to positive investment returns.
  • Surging equity markets were an example of “upside risk” that hit some investors hard in 2013.
  • Effective diversification should be meaningfully global within equity and fixed income, distributed broadly across asset classes and rebalanced on a periodic basis.
  • If you invest like everyone else, you likely will experience the same sub-par returns that everyone else does.
December 2013
  • Forecasts for: S&P earnings, interest rates, oil, inflation and other key metrics
  • How global economic expansion may sustain the bull market in 2014
  • How global manufacturing and global consumers may drive worldwide growth
  • How tectonic shifts in energy, technology, trade and frontier markets may pave the way to long term expansion


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