News & Publications

Q1
2018

Our View

April 2018

After strong returns in 2017 and a remarkably strong January 2018, stock market volatility has increased and equities are now negative year-to-date. In effect, what we’re witnessing is a struggle between strong business conditions, a synchronized global expansion and strong corporate profits versus the increasing fear of a serious trade war, a shift from U.S. quantitative easing to tightening and severe negative news about leading technology companies. As we look ahead and try to balance these conflicting forces, we come to the conclusion that strong business and increasing corporate profits will probably outweigh trade wars and other fears. read more ❯

Q4
2017

Our View

January 8, 2018

2017 will be remembered for strong equity returns and extremely low volatility; the S&P 500 total return was +21.8%, non-U.S. equities returned +27.8% . The primary driver of this goldilocks scenario was a global economic expansion and synchronized earnings rebound, the first time we have seen this broadly since the financial crisis. In addition, fears that quantitative easing would destroy economies via severe general price inflation have proven to be unfounded. We believe global equities are likely to continue to appreciate in an environment where there are few signs of excessive inflation and global monetary policy still remains loose. read more ❯

Q3
2017

Our View

October 4, 2017

Geo-political risks, particularly North Korea, are elevated and episodically impacting financial markets. Combining this with higher stock market valuations, some signs of late cycle economics, and a challenging legislative environment might suggest that portfolios should be underweight risk assets, such as equities. However, we remind ourselves that unpredictable geo-political events are always present and are very difficult to assess with certainty as to timing and outcome. We also believe it is possible that a series of virtuous economic and business outcomes could evolve. As a result, we believe it is still too early to be underweight equities, although we have eliminated the overweight that portfolios had previously exhibited. read more ❯

Q2
2017

Our View

July 10, 2017

In the second quarter the S&P 500 advanced 3.1%, bringing the index up 9.3% year to date1. We have used strength in the equity markets to further reduce exposure to U.S. equities, and we are now underweight U.S. equities within long-term growth strategies2 (predominantly common stocks). U.S. corporate profit growth has been the main driver of the stock market year to date; however, expectations for substantial reform initiatives in healthcare and corporate taxes appear bogged down in Washington, and are quite likely to be watered down and delayed. In addition, the Federal Reserve plans to begin “balance sheet normalization” which could result in higher interest rates, a higher cost of debt, and tighter money supply. read more ❯

Q1
2017

Our View

April 7, 2017

The S&P 500 has returned 11.3%1 since last November’s election on the premise that a pro-business agenda focused on tax cuts, deregulation, and infrastructure spending would be positive for the economy and the stock market. Five months into the rally and with little in the way of concrete results yet, this upturn will need to be accompanied by policy achievements in Washington and continued improvement in the U.S. economy to support the market’s higher valuations. We believe the following are important if U.S. equities are to continue to advance: read more ❯

Q4
2016

Our View

January 9, 2017

The election of Donald Trump as President was a surprise to the majority of voters and a shock to some. As a result, the positive response of the U.S. equity market (the S&P 500 increased 5% from Election Day through year end) was also a surprise to many. However, on analysis the market’s reaction appears rational: • President-elect Trump campaigned on a pro-business agenda, focusing on a combination of tax cuts, fiscal spending, and less regulation. read more ❯

Q3
2016

Our View

October 6, 2016

As the third quarter closes, there appears to be a substantial amount of cautiousness in financial markets, if not some outright bearishness. However, we do not think there is justification for the degree of bearishness that exists. The stock market is not statistically cheap, but there are no signs of exaggerated exuberance. read more ❯