May Market Update In our January 2018 commentary, we stated that, "the S&P 500 is well above its historical average, but high valuations do not mean bear markets." We further stated, "while these (years when the market is above its historical average) were not the market's highest returning years, compared to the 10-year Treasury, currently at 2.48%, it still looks attractive." Reviewing the year to date numbers, as of May… View More
We note that the big story clients are concerned about remains the US trade policy, but the rapid acceleration of economic growth and the declining poll numbers for Democrats suggest that economic fundamentals are outweighing trade policy, at least for the time being. Fiscal policy (Tax Cuts) of $800bn this year dwarfs trade policy and most of the trade retaliation tariffs (Currently estimated at $80bn) are rounding errors in a $20 trillion economy. NAFTA remains the real… View More
Despite the fact that the US cycle is long in terms of time (9 years), there still seems to be pent-up demand and momentum in the economy, and we're adding fiscal stimulus on top of that. Inflation will rise in this environment, but only slightly, and we think more investment is likely, which will boost output per hour and release some strain on the system. The ability to fully deduct capital expenditures for the next 5 years and the shift to a… View More
Markets were mixed this week as small cap stocks rose while large cap stocks declined. Oil prices continued to rise on the prospect of sanctions against Iran and reduced output from OPEC; Venezuela’s crude oil production, 800,000 barrels per day, is 65% below January 2016 levels. Brent crude, the international benchmark, briefly surpassed $80 per barrel for the first time since 2014. And, the PHLX Oil Service Sector Index rose 4.5% for the week to post a 24.5% gain since the end of… View More
As investors continue to climb the wall of worry, we believe that the bar is set low for an upside surprise in the markets later this year. Stocks advanced last week as investor confidence in the economic and corporate outlook improved. Lower-than-expected CPI (Inflation) and PPI (Producer Price Index) numbers, combined with last week’s report of modest wage growth, eased inflationary concerns. And, first quarter earnings season continued to outpace… View More