Monthly Commentary

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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
January 2013

Global equity and fixed income markets in 2012 all had a banner year led by Global REITs, Midcap, Smallcap and EAFE, which all topped the S&P 500's 16% total return. A last minute Congressional deal on the Fiscal Cliff sparked an end of year rally, setting the stage for an impressive relief rally to start off the first day of trading of 2013. The market has not digested the full economic ramifications of the new law -or inevitable follow-up changes yet to come -but that is for later. For a deeper analysis and answers to many questions on the minds of investors please review our "2013 Forecast: Good Economy, Challenged Markets", summarized below.

  • Global and U.S. economies are at reasonably good levels, but markets pay for and demand growth.
  • Negative S&P 500 corporate profit growth for 3rd quarter 2012 is signaling a defensive posture to start 2013.
  • The consumer remains the game changer with a boost from a resurgent housing market.
  • Tectonic shifts in energy, global trade, frontier markets and technology are catalysts for growth in 2013.
December 2012
  • Though equity markets have been calm, the real economy tells a different story.
  • If our leaders in Washington aren’t able to arrive at a compromise, January 1 will mark the beginning of the country’s first “scheduled recession”, though third quarter corporate earnings suggest a global slowdown is evident.
  • Don’t be surprised to see a Christmas rally should Congress kick the fiscal can down the road and the Fed extend Operation Twist.
November 2012
  • Third quarter earnings growth for S&P 500 companies is at risk of being negative for the first time in three years.
  • Though some risk assets softened in October, all are solidly positive year to date.
  • Monetary stimulus has stabilized markets, aided housing and the consumer, but alone it is inadequate; pro-growth taxation, spending and regulatory policy is necessary.
  • While the presidential election is important, Congress will ultimately control spending and tax legislation.
October 2012

Tectonic shifts in energy — led by new technologies to tap into natural gas stores deep under the surface of the earth — are expected to lead the United States to energy independence by 2020. Many investors have failed to recognize fully the profound impact the energy revolution — along with other tectonic shifts — is having on market fundamentals and asset prices. This report focuses on the impact energy has had on the private economy this year and our expectations for its long-term influence.

October 2012

Over the past year, markets defied a steady diet of financial Armageddon news to deliver healthy returns, but today risks such as softness in U.S. manufacturing, counterbalanced by aggressive monetary stimulus, compete for attention as investors attempt to distinguish between prudent risk con¬trol and outright risk avoidance.

September 2012

Global risks make headlines, but fundamentals and tectonic shifts such as global trade are the pillars of economic growth that support market resilience and — so far — a tireless bull market.

August 2012

How many asset classes are negative for the year through July? Would it surprise you to learn that all ten of the leading asset classes were positive for the year? The equity market is having its best start since 2003 and its second best since 1998-with fixed income having one of its best years ever.

This performance in the face of widespread negative perceptions demonstrates the importance of the market signals ING Chief Market Strategist Doug Coté has been stressing all along. In this month's ING Global Perspectives commentary, Market Climbs the Wall of Worry to Watch July Fireworks , he takes a closer look at "the risk gap," the inordinate fear of any risky asset class that can cause sidelined investors to miss out on the returns generated by the ABCDs of fundamentals:

  • Advancing Corporate Profits - Q2 earnings growth has once again confounded Wall Street, up for the 12th consecutive quarter.
  • Broadening Manufacturing - Two monthly dips after 34 straight months of expansion is a signal we're watching closely for future trends.
  • Consumer Strength Underestimated - Personal income rose in July, the savings rate increased to 4.4%, and housing prices increased for the second consecutive month.
  • Developing Economies are Driving Global Growth - In 2001 less than half the global economic growth came from "developing countries" like China; today it's nearly 80%.

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