2019 Mid-Year Review & Outlook

2019 Mid-Year Review & Outlook

Market Overview: The Late Stage Bull. After a disappointing end to 2018, financial markets snapped back during the first half of 2019. The risks that were forecast so heavily by financial media outlets during the fourth quarter of 2018 largely went unrealized, volatility receded, and financial markets strengthened. As both the stock and bond markets posted strong returns at the midpoint of 2019, we must now consider what the second half of the year holds. Although market concerns relating to continued tightening by the Federal Reserve receded, risks around trade negotiations, Brexit, Iran and Venezuela persist. Adding to the body of concerns, valuations increased measurably in both the equity and fixed income markets, while corporate sentiment waned, triggering numerous downward revisions to earnings estimates. As these and other risks rank and reorder through the balance of the year and beyond, risk management will likely take priority.  Read more...
2018 Year End Review & Outlook

2018 Year End Review & Outlook

Market Overview: Volatility and the Return to Normal. In 2018 volatility was present and notable. We first cautioned investors on the increasing likelihood for heightened volatility in our Q4:2014 Market Recap. After years of abnormally low volatility in equity markets, 2018 was a notable change with two strong sell-offs likely marking the end of the low volatility environment that generally characterized the prior decade (for more information see page 2 and 3 of our 2017: Mid Year Review and Outlook: https:// bit.ly/2tqpbkt) Market consolidations are healthy and should be viewed as more normal (for more information see page 1 of our 2015 Year End Review: https://bit.ly/2TUIs9o) A reasonable level of volatility should be welcomed as it can present opportunities in both equity and fixed income markets that can prove beneficial to those employing a robust asset allocation policy. In the near-term the return to normal should be beneficial for markets, providing a base to move forward on the foundation of an already robust economy. Give our station in the economic cycle, we feel strongly that investors should be prepared for elevated volatility at more regular intervals. Numerous significant issues need resolution in the forward view which include: foreign and domestic central bank policy direction, divisive governmental politics (foreign and domestic), trade and tariff negotiations and the pace of global growth. These and other issues are likely to impact confidence and deliver volatility in financial markets through the balance of 2019. Read...
2018 Mid-Year Review & Outlook

2018 Mid-Year Review & Outlook

Market Overview: Volatility finally presented itself and there may be more to come. In our year-end 2017 correspondence, we highlighted the potential for market volatility and our thoughts that it would present itself in some fashion during 2018. After a strong start to the year with equities increasing 8% over the first 18 trading days, equity markets reversed course and sold off abruptly, declining 10% over the next nine trading days. While this volatility did not approach levels experienced in 2008 it was significantly elevated versus recent figures. In the months following, volatility levels tempered, but the impact was real and we continue to believe that these volatility spikes will present themselves at more regular intervals given our station in the current market cycle. After recovering from the February lows, markets experienced a period of moderate volatility, retesting lows during early April before consolidating to mount an impressive move higher into mid-year were equities seem poised to challenge the highs from January. Read more...
2017 Year End Review & Outlook

2017 Year End Review & Outlook

Market Overview: Winds of Change Delayed But Likely Coming… 2017 surpassed just about every market observer’s expectations, providing a strong year of returns for equities both here and abroad. While a pro-business climate including the potential for less regulation, tax reform and infrastructure spending were themes heading into the year, only the unwinding of significant regulation put in place over the prior decade or so actually impacted the broader economy and financial markets in a meaningful fashion. While tax reform legislation was enacted very late in 2017, its impacts won’t be felt until February at the earliest and not fully until much later in 2018. That said, equity markets did respond positively to the legislation, rallying into year-end and more thus far in 2018, but the full benefit likely remains to be seen. Additionally, infrastructure spending, the third leg of the administration’s growth stool has no better than 50/50 odds of being approved given the partisan rancor in Washington. Financial markets and equities really liked what they have seen thus far and animal spirits for higher growth in the coming years are visibly present. The current bull market in equities is in its later stages (and can continue for some time) requiring a greater level of discipline from an allocation and valuation perspective. Read more...
2017 Mid Year Review and Outlook

2017 Mid Year Review and Outlook

As we stand at the midpoint of 2017 it is difficult to reconcile the historically low volatility and how exactly we arrived at this point considering the political divisions in Washington, rising interest rates and global uncertainties. On the surface, it might seem volatility and caution should have dominated financial markets but there was little sign that investors restrained their appetite for risk in financial markets. Let’s take a...
2016 Year End Review and Outlook

2016 Year End Review and Outlook

As we look back on 2016 there is much to consider in what seemed a tale of two halves. During the first part of the year headlines were dominated by several points of concern such as slower global growth, oil prices, interest rates and the announced exit of the U.K. from the European Union. The back half was dominated by the November elections here in the U.S. As always it is important to place these events in the context of a well-diversified portfolio as a larger function of your overall financial plan. Let’s take a...