Monthly Commentary

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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

April 2013
  • Despite the hoopla over first quarter market performance, it paled in comparison to the first three months of 2012.
  • Driven in part by the extremely accommodative monetary policy, the U.S. economy is gaining traction, but Europe continues to flounder.
  • After their first negative print in three years during the third quarter, S&P 500 companies returned to positive earnings growth in the fourth.
  • A broad, globally diversified portfolio is the best way to balance the desire for wealth accumulation with an appreciation of volatility.
March 2013

Highlights from this month's views include:

  • The U.S. equity market is on a roll, still cheering investors after a multiyear bull market.
  • U.S. equities have dominated emerging markets for three straight years
  • While U.S. large-cap equities get the headlines, mid and small caps have continued to excel.
  • Frontier markets have picked up the slack as major emerging markets stumble.
  • Global risks persist, though U.S. fundamentals appear solid.
  • The move toward U.S. energy independence should soon result in a trade surplus, boosting GDP.
February 2013
  • Investors responded to abated risks in Europe, temporary relief from fiscal cliff concerns and the largesse of the Fed punchbowl with the best January returns in years.
  • Nevertheless, fundamentals ultimately drive markets, and concerns —notably, weak third quarter earnings and the threat of the coming “sequester” — remain
  • The rally highlights the folly of gaming diversification —holding cash is a costly response to market uncertainties — and we hope January’s enthusiasm will help lure groundhog-savers out of their holes

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