Commentaries

ECONOMIC & INVESTMENT OUTLOOK APRIL, 2017

What a difference a year makes! It has been a profitable and comfortable start to 2017 compared to a volatile first quarter last year. The first five days, week, month and quarter were all up, so the odds favor another double-digit return this year. Furthermore, the often discussed “Great Rotation” may be starting. Inflows into equities surpassed $118 billion since the election and were four times the size of inflows into bonds. This is a small offset to bond inflows that dwarfed equities by $650 billion since March 2009, but highlights the power if these trends were reversed. Given the healthy start to the year, is there anything to worry about? There are always worries, but the markets thrive on healthy skepticism. Fortunately, politics and valuation top the list, not the growth outlook. Investors remain concerned that bipartisan politics will derail progress and the market may be overbought following a 13% gain since the election. A healthy correction (5-10%) could occur anytime, but we focus longer term and believe equities are attractive based on moderate growth, low interest rates and subdued inflation.

ECONOMIC & INVESTMENT OUTLOOK APRIL 2017 (pdf)