The U.S. economy is shifting from reflation to inflation – and we have greater confidence in inflation returning to its medium-term trend and the Federal Reserve’s target. Better wage growth and potential fiscal stimulus should cement this transition.
The current equity bull market has been chugging along, enjoying unusually low volatility in recent quarters. The S&P 500® Index is on an extended bull run. The index hasn’t had so much as a 5% correction since February 2016, and it has gone without a 20% or greater pullback since March 2009.
While Tech remains one of RBA’s largest overweight sectors in our portfolios, one thing to consider is the sector’s dirty little secret: it’s really a deep cyclical.
President Trump has announced Fed Governor Jerome Powell as his nominee for Chair of the Federal Reserve Board. A Fed governor since 2012, Powell has been confirmed twice by the U.S. Senate and likely will be confirmed as chair without controversy in time to take over when current Chair Janet Yellen’s term expires in February 2018.
One could argue that this latest statement came in on the dovish side. But a broader read rapidly dispels that notion.
A global factor helps explain why central bank policies often tend to be correlated across countries.
2008 may have generationally scarred investor psychology. As a result, many continue to disavow the current bull market and instead heed warnings of an impending bear market. We argue that fundamentals remain strong and the global equity markets are rife with opportunity.
The third quarter of 2017 closely resembled the first half of the year – global markets continued to grow steadily, resulting in positive returns for many strategic domestic and global equity investors.
Going into today’s important Federal Reserve meeting (with a press conference and an update to the economic projections, aka the “dot plot,” along with the usual statement), we at PIMCO along with most market participants expected the Fed to announce formally the start of balance sheet reduction this fall, perhaps in October. And that’s exactly what the Federal Open Market Committee (FOMC) did.
Many investors no longer view the US as the global safe haven to turn to during bouts of volatility. We argue that US and global fundamentals remain strong, however, many global investors seem to be losing religion.