Monthly Commentary

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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.
March 2016
  • Stabilizing oil prices inspired a global relief rally in February as market volatility eased.
  • U.S. economic growth has been supported by a resilient consumer segment, while manufacturing is sluggish but improving.
  • Earnings growth for S&P 500 companies has contracted for three consecutive quarters, and first quarter 2016 also looks challenging.
  • A rebound in growth — both in corporate earnings and the global economy — is the catalyst needed to move the markets into positive territory.
February 2016

Global markets plummeted in January, kicked off by a historically bad year-opening week of U.S. stocks. The downdraft was prompted by continued uncertainty around the seemingly bottomless oil markets. China’s unusual policy actions added to the tumult, while the potential for central bank intervention continued to lurk in the background as a potential wild card to either the upside or downside.

  • Seemingly bottomless oil prices conspired with a skittish China and central bank uncertainty to drive markets sharply lower in January.
  • China’s unusual policy approach is raising concerns that the country is in bigger trouble than official economic data suggest.
  • Central banks still have extraordinary power to support economies and markets.
  • Fundamentals light the way in an uncertain world; while 2015 earnings look negative, the outlook for 2016 is positive.
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