Monthly Commentary

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December 2018

In 2019 we expect, and prudent investors should prepare for, “the storm before the calm” — tighter monetary conditions, uncertainty that includes a “disorderly Brexit” and increasing tensions between China and the United States on multiple fronts. We expect a storm though, nothing more.

  • Exceptionally strong economic growth has prompted the Fed to raise interest rates, reduce the balance sheet and generally to “Rip the Bandaid Off” from a zero rate environment.
  • The subsequent surge in volatility is cleaning house from rampant speculation that needed to be unwound - setting the stage for a healthier and calmer market in the future.
  • Two of the “Big 3” — China and the Eurozone — are struggling for geopolitical reasons but also due to the U.S. regaining its ranking as the most competitive country in the world.
  • Investors should prepare for the “storm” of tighter monetary conditions and greater geopolitical uncertainty but not at the expense of losing sight of our forecasted “calm” outlook.
  • Diversify, be disciplined and do not forget your ABCs — which in our 2019 forecast extend all the way to J-Jobs.
October 2018

This autumn marks 10 years since the Great Recession, the worst economic crisis of our time, which arguably came very near to a global depression.

  • Ten years after the Great Recession, the economy and markets are thriving thanks to pro-business policies
  • Expanding investment and productivity suggest that tax cut incentives have staying power
  • Nonetheless, many people remain too risk-averse to take advantage of favorable conditions
  • Investors should stay well diversified and embrace the ongoing bull market
July 2018

Strong economic news punctuated the first half of the year, yet markets remained mired in struggle. Main Street has been celebrating as the economy has quietly amassed record highs in U.S. wealth, employment and spending.

  • The economy is quietly enjoying a “stealth” economic boom driven by pro-business tax cuts
  • Small business optimism on a “stratospheric trajectory” resulting in robust expansion plans
  • Trade tariff retaliation, rising inflation and a rising U.S. dollar spike global market volatility
  • Strength amidst uncertainty argues for broad global diversification
April 2018

Growth across the board in employment, manufacturing and business confidence either notched near or surpassed record highs.

  • Economic growth was unleashed in the first quarter – in the United States, China and Europe
  • Markets also were unleashed and volatility spiked on fears of inflation, tariffs and technology companies
  • Tax cuts are a game changer which is not fully priced into corporate earnings
  • Geopolitical risk has fallen with saber rattling replaced by a surge in diplomacy
  • Global diversification is working with seemingly riskier assets ending the first quarter positively
December 2017

In our view, the economy is experiencing a marked shift back to free-market capitalism, rewarding private risk-taking. That inspires growth.

  • Pro-business tax cuts are the icing on the cake of a strong global economy
  • The United States, China and Europe are the “big three” that will drive global growth
  • Amid market complexity, it is best to focus on the ABCs of economic growth
  • Productivity to regain its mojo, even as inflation struggles to regain its luster
  • Currency stability of the big three is the base case but tail risk might wag this dog
  • Global diversification will dominate U.S.-centric investing for a second straight year
October 2017

Nothing — nothing bad, that is — has been able to stick to these Teflon markets, which have demonstrated an astounding, maybe even confounding, resilience.

  • These “Teflon” markets have been perpetually repelling bad news of all stripes
  • Market resilience is further bolstered by strong fundamentals worldwide
  • Pro-business tax cuts are the elixir that may shift this market into high gear
  • Central banks may be unintentionally blocking progress on reflation
  • Prudent diversification protects against upside and downside risk
July 2017

The "growth and reflation" trade continues intact due to the positive global economy and the hawkish inflection point in global central bank policy. 2017 markets have been "two steps forward and one step back," a path that rewards those fully invested or those who opportunistically "buy the dips."

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.

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