All Posts Tagged: fixed income

Investment Insights: Excerpts from our Q1 strategy report

Wade Balliet
Posted by Wade Balliet
Investment Strategy

The following are excerpts from the Q1 2017 “Investment Insights” report, produced by the Global Investment Management team. For the full report, click here.

Aerial view of skyscrapers near the river in ShanghaiThe year of warm porridge

Everyone seems to be feeling pretty good about the economy and the markets, barring a sneaking suspicion about stock valuations. The Conference Board Consumer Confidence Index is showing U.S. households are the most optimistic they have been since just before the dotcom crash back in 2000 and above even the most confident times just before the Great Recession. While we don’t base much on sentiment, there might be good reason for consumers to be feeling so good. We believe the U.S., and most of the world, are in an economic sweet spot. The combination of low-to-no inflation, accelerating economic growth, and a recent uptick in wages has put consumers, and financial markets, in a “Goldilocks zone” – not too hot, not too cold.

(Potential) policy, policy, policy

In the world of politics, risks in Europe have begun to fade. Far-right party candidates that, if elected, would seek to leave the European Union and instate much more protectionist policies have fallen behind or lost in recent polls. Issues like immigration and populism remain significant topics for many countries, but it seems financial markets have avoided a possible shock from another surprise result similar to that of Brexit. In the interim, U.S. policymakers continue to spitball potentially meaningful changes to policy and legislation, but have yet to take much action.

The Trump administration has been working feverishly to pass legislation that would repeal the Affordable Care Act and sign into law a new health care bill – with not much to show for it. The statutory process may be finally revealing the different bi-partisan obstacles to parts of Trump’s pro-growth agenda. We believe U.S. stocks have partially priced in the potential policy changes on the agenda like infrastructure spending, tax reform, and easing of regulations. However, not all bills are created equal and some of these policy changes will be harder to pass than others. With that said, a cut to personal and corporate taxes may be an easier sell to lawmakers and could be considered a quick win for both the administration and the stock markets. We will be keeping an eye out for that in the latter part of this year. The fiscal spending deal is likely much more up in the air and has been a driver to stock markets based on the expectation that fiscal policy would take the reins from monetary policy for higher economic growth. If there is a disappointment in the fiscal stimulus to the U.S. economy, stocks would likely react negatively to the news.

One eye on earnings and the other on China

While we don’t necessarily believe the current equity rally is over, we have said the road ahead may be more difficult. One of the larger bumps in the road could be China. The Chinese economy has been a main driver for global growth over the past decades and has been seen as irrepressible due to consistent reported growth. Recent data, however, has shown a more worrisome story and growth figures may begin to moderate further. Typically, stock markets have been fairly unkind to any notion of big trouble in China – our group believes markets may use China as an “excuse” to correct given a large enough disappointment in forward-looking economic data.

Click here to read more of the quarterly “Investment Insights” report.
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Investing involves risk, including the possible loss of principal and fluctuation in value. Economic and market forecasts reflect subjective judgments and assumptions, and unexpected events may occur. Therefore, there can be no assurance that developments will transpire as forecasted. Nothing in this newsletter should be interpreted to state or imply that past results are an indication of future performance.

Fixed income securities are subject to interest rate, inflation, credit and default risk. The bond market is volatile. As interest rates rise, bond prices usually fall, and vice versa. The return of principal is not guaranteed, and prices may decline if an issuer fails to make timely payments or its credit strength weakens.

International securities involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.

Diversification and asset allocation does not ensure a profit or guarantee against loss.

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Investment Insights: Between a rock and a hard place

Wade Balliet
Posted by Wade Balliet
Investment Strategy
Black silhouettes of several male and female executives at a meeting table under a blue global map.

This weekly report presents insights from our Global Investment Management team. The S&P 500 Index sank 1.23% during trading hours Tuesday, the first daily decline of over 1% since October 11th last year. Markets seem to be reassessing near-term risks as oil slumps and the U.S. dollar continues a precipitous decline that started just over […]

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SRI: Investing and feeling good about it

Steve Prostano
Family Wealth Advisors
Young, bearded man in a business suit discussing plans with an African American female colleague holding a tablet.

This blog post is part of a year-long series that examines key concepts in our glossary of philanthropy services terms. Socially responsible investing (SRI) – also known as sustainable investing, as well as socially conscious, green, or ethical investing — encompasses any investment strategy which seeks both financial return and positive social outcome. SRI is […]

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Investment Insights: Excerpts from our January report

Wade Balliet
Posted by Wade Balliet
Investment Strategy
Signposts on a pole pointing multiple directions in a very foggy hike-path intersection.

The last couple of months have been like driving your car in a fog. It would be equally dangerous to brake too abruptly as it would be to press down on the accelerator too hard.

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Investment Insights: 2016 in the rear-view mirror

Wade Balliet
Posted by Wade Balliet
Investment Strategy
Closeup of "2016" written in sand, with an incoming ripple of water about to wash over it.

Major asset classes posted stellar results for investors in 2016, with the vast majority ending in positive territory.

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