February 2018: Latest Sound Bites on the Market and Economy
Well, we’re seeing some gravity and a sharp rise in volatility take effect in early February after a very strong start in the U.S. stock market in January. And we think this weak start to the second month of the year is quite normal… not alarming or a sign of “madness”. Interestingly and perhaps ironically, this softness in the market and long anticipated rise in volatility in early February is occurring in the midst of robust U.S. and global economic news and smackdab in the middle of the release of stellar earnings reports and strong EPS guidance for calendar 2018. It’s also happening in the face of a warranted rise in optimism, emanating from stimulative tax cuts that are occurring much more quickly than investors imagined only weeks ago (if ever!). In addition, investors can’t help but be impressed by the concurrent, broad and surprisingly strong positive reactions of corporations to the reduced tax rates via their plans to share the upcoming tax windfall by providing one-time cash bonuses to employees at all levels.Read The Report
December 2017: Latest Sound Bites on the Market and Economy
It has been a good year for equity investors. While the networks may be obsessing about the recent SPECULATIVE run in bitcoin, true INVESTORS in stocks have much to cheer about also as we close-out 2017. Few "experts" thought we would see a strong double digit advance in the S&P 500 this year, with international markets doing even better.Read The Report
November 2017: Latest Sound Bites on the Market and Economy
We’re down to the home stretch for the year. As they say though, this is not the time for us to become complacent; on the contrary, it is the time to stay vigilant in our research. While investors would surely embrace a Thanksgiving/ Santa Claus rally, many might be skeptical about that possibility given the almost 17% return we’ve seen already in the S&P 500 in 2017. In our “Crystal Ball” webinar in January, we projected a 2400-2500 price level for the S&P 500 by the end of this year, and stated that we felt risks were to the upside, if earnings came in as handsomely as we thought they could. Earnings indeed have been robust and at roughly 2575 today, it looks like the upside case for the S&P 500 is close at hand. At this juncture, many ask us… can this advance continue?Read The Report
October 2017: Latest Sound Bites on the Market and Economy
We’re in that final period of the calendar year and what a year it has been indeed. We’ll take more like this one anytime! The economic data has been not only solid but surprisingly robust. We’re just now getting early results on Q3 “earnings season” as companies begin to report, but we anticipate earnings for the quarter beating once again and delivering a solid mid-single digit growth figure, which should put the S&P 500 on good footing for double digit earnings growth for the year…with zero help from potential fiscal stimulus out of Washington. Further, global economies are doing well. While the S&P 500 is up roughly 14% on a year-to-date basis through 9-30, developed international is up 20% and emerging market equities are up over 28%. This is supported by solid fundamentals, reasonable valuation, and excellent underlying price trends in the market that exhibit broad participation in advancing stocks rather than narrow leadership by only a large few names that would spell warning signs of a market top.Read The Report
September 2017: Latest Sound Bites on the Market and Economy
We hope you enjoyed our recent “Mid-Year Review and Market Outlook” webinar which we sent out to everyone. As its highly creative title implied, the webinar focused on our take on the first half of 2017 and our outlook for the remainder of the year. We appreciate the opportunity to follow-up via this final Sound Bites issue of the summer and highlight several points of interest as you head into the long Labor Day Weekend. The Labor Day holiday was established as a national holiday in 1894 by President Grover Cleveland after 30 states had already begun to recognize it independently. According to Wikipedia, Labor Day “honors the American Laborer and the contribution workers have made to the strength, prosperity, laws and wellbeing of the country” Amen!Read The Report
June 2017: Latest Sound Bites on the Market and Economy
No doubt about it, the first half of 2017 has been good to investors…US stocks and bonds did well and foreign markets were even better. We’re pleased to report that our portfolios were positioned well and for the most part were in the right places. Will the solid performance continue in the second half? We’ll address this as well as dispel a couple of market myths in this month’s Sound Bites.Read The Report
May 2017: Latest Sound Bites on the Market and Economy
In this month’s Sound Bites, we wanted to kick-off your Memorial Day weekend holiday by setting the mood and sharing with you the outstanding earnings news and guidance that came out of the Q1 2017 earnings reports from corporate America. It was quite good—and this may actually be a bit of an understatement. In addition, as you gather with family to remember all the great sacrifices and contributions made by past generations and loved ones no longer with us, we wanted to provide you with some interesting observations and characteristics of a younger generation that is now coming of age and which represents the future leadership of this country—the millennials. These trends and factoids will hopefully shed some light on the opportunities this generation has to impact the longer term outlook and fabric of the US as well highlight the near term influences they may have on our economy and markets, from our perspective.ﾠRead The Report
April 2017: Latest Sound Bites on the Market and Economy
After a fantastic start to the year in which the market advanced more than 7% in January and February, the S&P 500 stalled a bit in the March/April time period—no great swoon; it just seems like those oft cited “animal spirits” are a bit less animalistic in nature for the moment. That’s probably very healthy from our perspective. As of this writing in late April, the S&P 500 has taken a breather and is off a modest 2 % from the March 1st peak. In this month’s Sound Bites, we’ll address our thoughts about the likelihood of a market correction of more normal magnitude--something larger than 2%--and whether or not such an occurrence might change our positive view on stocks for 2017. We’ll also discuss two other items that more pessimistic investors are focusing on and how we view these “wall of worry” issues…namely: 1. Stock market valuation that some say is too expensive at this juncture; and 2. The latest trends in policy out of Washington and relevancy to the direction of the market.ﾠRead The Report
February 2017: Latest Sound Bites on the Market and Economy
Wow, what a totally different and far better start to 2017 versus 2016 for investors. This is more like it! The S&P is up over 5 percent YTD, and economic data releases continue to signal accelerating growth. This time last year, the market was down roughly 11 percent, and we were off to the worst start to a new year in HISTORY. For 2017 we do expect another fertile year for returns, based not on hope about legislative and policy reform in Washington and the associated “animal spirits” emanating therefrom, but based on good old healthy fundamentals, valuation levels and technical price trends.
December 2016: Latest Sound Bites on the Market and Economy
Well, we made it through several key headline challenges this year, including Brexit and the US election, and here we are, once again at Holiday time, in the midst of a traditional “Santa Clause” rally. Many investors are pleasantly surprised about the positive market results in 2016 and this strong close to the year, fearing Santa might not show up in Q4 this time around. Surprise! Based on our forecasts and communications through the year, we are not. Soon we will turn attention to 2017 and what’s to come. In that vein, what is on people’s minds as we approach the New Year?
Election Night Update – Surprise, Surprise
Yes, we can’t help but be surprised by President Trump’s victory last night but also by the results in the Senate race as the Republicans kept control of the Senate which was a major surprise. Because of this, some in the media are characterizing this as a Republican “sweep.” We don’t see it this way as the majority in the Senate remains narrow and leadership in the House doesn’t necessarily see eye to eye with President elect Trump. Appropriate checks and balances in government appear to be in place from our perspective. The key to President Trump’s victory was his wins in states like Pennsylvania, Michigan and Wisconsin along with key battleground states, Ohio, Florida and North Carolina.
November 2016: Latest Sound Bites on the Market and Economy
This month’s sound bites on the market and economy focus on three trends we saw shift in the third quarter of 2016 and expect to continue through year end. A shift in market leadership away from defense and yield sectors to more growth driven areas of the market took place in the third quarter. We are also seeing the
beginning of the end of the earnings recession which has caused many people to question the merits of the latest rally in the market. Finally, volatility is back as talk about our election, Brexit and Federal Reserve rate hikes start to make headlines again after a summer off.
September 2016: Latest Sound Bites on the Market and Economy
In an effort to continue to provide details on the current economic and market environment, we are providing our thoughts on multiple topics in a different format. This is a shift from our previous newsletter format which was longer and focused on a single topic. This will allow us to keep our clients more broadly informed and allow them to follow up with their Wealth Advisor Team should they want to discuss a given subject in more details. We will continue to produce the longer, thematic newsletter on a quarterly basis. We hope you enjoy.
August 2016: Slow Growth – Starting the Second Half of the Year on a High Note
The S&P 500 index recently made a new, all-time high. It had struggled to break through the 2130 level, which was originally reached a year ago. Since that time, the S&P 500 index has been in a broad trading range, bounded by 1810 on the downside and 2130 on the top end. The U.S. stock market has been trading in this range over the last two years. As of July 20, the S&P 500 set a new all-time high at 2173, an upside breakout from the previous trading range.
May 2016: Slow Growth – The New Normal or Just a Lull?
The U.S. economy has entered a new environment, where 2 percent real economic growth, as measured by real GDP, is considered “normal.” For reference purposes, our economy has grown by 3.2 percent, on average, per year – including recessions – since the end of World War II. Despite the “new normal” of slower growth, we don’t have to accept this fact that the U.S. can’t reasonably expect to grow much faster than 2 percent on an annual basis. Our economy has proven to be resilient in the past and gotten out of moments in time where economic growth looked bleak at best. We believe slower growth is not a pre-determined destiny, and that with a few changes we can get back to growth rates seen pre-2000.
April 2016: Complacency- Not on Our Watch
History books tell us, and our own observations back up the fact, that stocks on balance have risen in value 3.5 years for every year of decline. Since 1925, over any rolling 12-month period of time, the stock market has generated a positive return 73 percent of the time (S&P earnings data herein from spindices.com). Over any rolling 5-year period of time, the stock market has generated a positive return 86 percent of the time. This we know. That said, this rather rosy data cannot be used to rationalize a buy and hold forever mentality. Tactical adjustments must be made and a more defensive posture embraced when signs of an extended bear market appear. After all, these periods of decline can last a year or more. We do not see such negative signals present; this is why we remain positive on the U.S. equity market and maintain the midpoint of targeted allocation to stocks in our client portfolios. It is the data, not complacency, which leads us to this conclusion. When the facts change, we will change our view.
March 2016: A Political Season To Remember
Our purpose in this piece is to provide an interesting perspective on the
2016 election. Many seem to be of the belief that contested conventions
are unprecedented and fear that we are in absolutely uncharted territory…a
quick glance at history suggests otherwise. Second, we’ll address how we view all of this in the context of economic impact and relevance to managing your portfolios. We conclude that this, like many periods, is an interesting paradigm but not new or uncharted.
February 2016: Assessing the Risks of a Recession
Benjamin Franklin coined the phrase, “In this world, nothing can be certain except death and taxes.” We might modify this line of thinking with regard to the stock market for 2016 and recognize an additional given called volatility. Oil prices, the Fed and China continue to be in the headlines and are big contributors to the volatility and investor angst.Read The Report