For fans of surprise endings, especially in political contests, 2016 was a banner year. Unexpected election outcomes swung global equity markets both up and down and continue to influence the outlook for many sectors and companies.
Earnings are the key to 2017 stock market outlook. S&P 500 earnings passed an important milestone in 2016, returning to growth in the third quarter after mildly contracting for several quarters during an extended mid-cycle earnings recession.
In conjunction with the publishing of a summary of Schwab's 2017 outlook across asset classes; this report is a more detailed summary of my 2017 outlook, with a dash of rear-view mirror analysis of the year just ended. Each of the broad topics discussed below will be further unpacked over the next couple of months in individual reports.
The fourth quarter of 2016 was a profitable period for globally diversified multi asset managers. All major domestic large cap indices were up for both the quarter and the year.
As we always do in January, this month we focus on the investment minefield laid out in front of us and we argue that with upcoming elections in the Netherlands, France and Germany, and economic uncertainties globally, this year could turn into a rather tricky one for investors. There are reasons to be optimistic, however, and we hope that 2017 will be a prosperous year for you all.
Each year I make a practice of reviewing The Ten Surprises of the year that has passed. Last year’s list was on its way to being one of my best and then Donald Trump won the presidential election and everything changed.
Every six months, we share insights from Loomis Sayles portfolio managers and analysts; what are the current themes and risks shaping their investment decisions? Looking into 2017, geopolitical shifts, rising rates, regulatory changes and new proposed policies from President-elect Trump will all be key factors.
Consider the DOL’s new Fiduciary Rule. When it goes into effect in April 2017, it will inevitably limit the number of investment products available to retail investors. The ruling states that all retirement planners, advisors and broker-dealers must now “act in the best interests of clients” and charge only “reasonable” fees. This all sounds fine, but what’s naturally going to happen is financial professionals—in an effort to remain compliant with the rule—will recommend only the least expensive products, regardless of whether they’re a good fit. Many mutual funds—which might be better performing but have higher expenses than other investment vehicles—will fall off of brokerage firms’ platforms.
Markets have generally been risk-on since Donald Trump’s election as president. Yet tremendous uncertainty remains over future fiscal and monetary policies, and volatility persists at high levels.
The ECB’s decision in early December to reduce the monthly pace of its asset purchase program came as a surprise. But investors should draw considerable comfort from its commitment to maintain a “sustained presence” in euro-area markets.
As we enter 2017, we expect the current economic rebound to continue suggesting GDP growth will likely move toward the 3% level by the end of the year based on less monetary stimulus, more fiscal stimulus, a reduction in the corporate tax rate, and deregulation.
In more ways than one, 2016 was a roller coaster year. One need only look at gold’s performance to confirm this.
Something is brewing in the economy. Since the election of Donald Trump, interest rates have spiked, copper prices have surged, and various sectors of the stock market have swung “bigly” on speculation of what “Trumponomics” will bring.
Included in this week’s On My Radar: -Pension Fund Red Ink – Check Out Your State (Chart) -Foreigners are Dumping Treasury Bonds at Record Rate -The Year in Review -Trade Signals – Strong Dollar, Weak Gold, Equity Trend Up, Bond Trend Down, Sentiment Remains Far Too Optimistic
As we head into the New Year, I want to share with you the six most popular Frank Talk posts of 2016. Before I do that, however, I think it’s important to note one recurring theme I write about that continues to help our investment team and shareholders better understand the movement in commodities and energy: the purchasing managers’ index (PMI).
For those concerned about interest rates rising, turning to the floating rate loan market may seem like it could be a great alternative. Over the past few weeks, as we have seen the expectation for higher rates firmly take hold and a spike in Treasury yields, floating rate loans (also called leveraged loans) are once again becoming a popular trade.
Most of the time not a whole lot actually changes in the markets over the course of a month. For example, small cap stocks tend to outperform large cap stocks by a rather mundane 31 bps over the course of a month on average going back to 1996.
Stampeding global markets post-election make us question whether the bull still has life. This month, we present a rationale for why it may still have room to run, analyze its underpinnings, and suggest how investors can use market dips as entry points to reposition portfolios and take advantage of what may be a new trend in equity strength.
As the year winds down, our weekly commentaries have reviewed how 2016 forecasts played out, and we do the same this week with a review of fixed income.
Volatility in the market can make profitable investing a tricky task. It is important to understand the different investment options and the associated risks. With new research challenging traditional investing fundamentals, it is more important than ever to look at which strategies are available and how they can help create a diverse, flexible portfolio.
Investors have been drawn to real assets in general and to real estate in particular due to the comparative stability and attractiveness of their income returns and the prospects for growth.
Policymakers may have to juggle a rising dollar, higher yields and a lag in any Trump stimulus.
As we head into the final stretch of 2016, the U.S. dollar has taken control of the markets. As the incoming Trump administration continues to promise fiscal spending and tax cuts, the Fed is now positioning to do a bit more tightening—all while the U.S. and global economic datapoints move higher.
Still casting about for a New Year’s resolution? If you’re an income-conscious investor, try this: expect that something unexpected will happen next year and act now to cushion your portfolio.
What’s ahead for emerging markets in 2017? Stephen Dover, managing director and CIO of Templeton Emerging Markets Group and Franklin Local Asset Management, and Mark Mobius, executive chairman of Templeton Emerging Markets Group, present their emerging-market equity outlook.
This week we take a look back at some of our hits and misses of 2016. We certainly had some of both in what was a difficult year to forecast the equity markets.
A quarter-century before Brexit came “Black Wednesday.” On Wednesday evening, September 16, 1992, the British government announced its exit from the European Exchange Rate Mechanism, prompting a dramatic devaluation of the British pound. Renowned hedge fund manager George Soros’ legendary bet against the pound in 1992 and his $1 billion profit on Black Wednesday defines for many the swashbuckling style of a global macro trader.
The Calamos Global Equity Team explains why they view India as one of the most compelling stories in the emerging markets.
For many investors, the post-election rise in U.S. stock prices hasn’t necessarily translated to a post-election rise in portfolio values. Does diversification still work?
John Pattullo, Co-Head of Strategic Fixed Income at Henderson Global Investors, discusses how the markets were affected by major political events in 2016 and the lessons learned.
When we made our predictions in January, a key theme was that 2016 would be a year that would frustrate both the bulls and the bears.
I’ve fielded a large number of investor questions recently around tax cuts and earnings. The idea is that tax cuts, for both corporations and individuals, will significantly improve corporate earnings and thus propel the market higher.
In the fight for American jobs, we could be “risking” a trade war with China right on our southern doorstep. Though the stakes might not be as high as total global domination, they come pretty close. With rates moving up and the world resetting to less quantitative easing, inflation might accelerate. To avoid a global recession, Trump will need to make streamlining regulations a top priority.
With the Federal Reserve back in the spotlight, Rick Rieder discusses what investors should be focused on in 2017.
We assess three global economic scenarios for 2017.
Though stable stocks are expensive and look vulnerable to rising interest rates, we still see ways to build a winning defensive portfolio. But it’ll take some unconventional thinking.
With a growing likelihood that Trump's fiscal policies will be inflationary, this could translate into a faster Fed tightening cycle says Greg Meier, strategist with Allianz Global Investors. So will President Trump find it easier to bring back inflation rather than factory jobs?
The Federal Reserve surprised no one today and the vote was unanimous. The Federal Open Market Committee (FOMC) raised the federal funds rate by 25 basis points—to a range of 0.50-0.75%—for the first time this year; having raised rates initially a year ago at this same time.
Bond yields usually rise as the FOMC raises rates. This is one of the mostly strongly held consensus views in the market right now. A year ago, investors also thought yields were set to rise; instead they fell over the next half year. Might investors be wrong now once again?
Global equities are more than 20% higher than in February. A tailwind for this rally has been the bearish positioning of investors, with fund managers persistently shunning equities in exchange for holding cash.
Jeffrey Gundlach predicts trouble for the equity, corporate and junk-bond markets if the yield on the 10-year Treasury bond goes above 3% in 2017. Even the housing market would suffer.
Surging bond yields have not spooked stock market investors. The latest sharp move higher in bond yields has caused stock market investors to ask the question, At what point do higher interest rates potentially begin to hurt stock prices?
When the market starts buzzing about rising rates, high-yield bank loans’ popularity grows. Although the bank loan bandwagon may look tempting, we’ve found reasons why high-yield bonds shouldn’t be so easily dismissed.
How much do investors worry about volatility? It comes down to their life stages. Dr. Brian Jacobsen takes a data-driven look at retiree and non-retiree viewpoints, with results from the Wells Fargo/Gallup Investor and Retirement Optimism Index.
Bond investors are feeling a little shell-shocked after the rise in interest rates in November.
“If you’re not getting better, you’re getting worse.” – Walter Bahr
Donald Trump took the world by surprise in winning the U.S. presidential election.; While the Trump triumph and ensuing policy conjecture held the spotlight, a flurry of positive economic releases globally signaled solid fundamentals.; Risk sentiment built, particularly in the U.S.
It's not unusual for a new year to bring changes. But 2017 may be particularly noteworthy. Topping the list is a new U.S. president and Republican-controlled Congress, bringing the prospect of a new direction for many policies, regulations and legislative priorities. Elections and leadership changes also are on the calendar in several major countries, including France, Germany and China. What may not change next year are the geopolitical tensions that continue to pressure several regions around the globe.
Inflation can be understood as the destruction of a currency’s purchasing power. To combat this, investors, central banks and families have historically stored a portion of their wealth in gold. I call this the Fear Trade.
