Posts in Financial Markets
Confronting the Market Setback

“By the end of the summer I became convinced that the United States equity market was setting itself up for a powerful post mid-term election rally. The economic fundamentals were strong: unemployment was at a 40-year low and real growth was better than 3%; the Federal Reserve was raising rates, but that was only a noble attempt to creep back to normal levels for the later stages of a business cycle. The yield curve was likely to remain positive, inventories were not excessive and leading indicators were still rising.” Click here to continue reading.

Source: Blackstone

The Grinch Comes to Loanland, but Expect a Short Visit

“Just seven short weeks ago, the floating-rate loan market was standing tall with 4.0% year-to-date return through October. Not only were loans on pace for the 5%+ calendar year mark that many anticipated, they had performed with remarkably low volatility and a performance profile that trumped all major asset classes.

Enter the Grinch.

Click here to continue reading.

Source: Eaton Vance

Update on the Investment Markets

On Friday, December 21st the Innovest Investment Committee sent a communication regarding the investment markets to our clients.

Coal and Diamonds

Investment returns from one year ago seem like a distant dream. In 2017, U.S. large cap stocks returned 21.8%, and overseas stocks gained even more: developed international stocks were up 25.0%, and emerging markets roared with a gain of nearly 37.3% for the year. Even high-quality bonds generated returns of 3.5%. Investors’ Christmas stockings last year were filled with diamonds, so to speak. To keep reading, click here.

Source: Innovest

The Investment Implications of the Midterms

“The results of the U.S. midterm elections were largely in line with expectations,

with one important wrinkle. Although, as anticipated, the Democrats took the

House of Representatives and the Republicans held the Senate, the Republicans

increased their majority in the Senate and this, from a political perspective,

appears to validate the President’s strategy of taking a hard line on immigration

and trade.” Click here to read the full article.

Source: JP Morgan

Productivity, Inflation and the Path of Rates

"Last week, in line with expectations, the Federal Reserve hiked rates, freed itself from its "low-for-longer" forward guidance and lifted its "dot plot" a little higher. The European Central Bank also followed the script, confirming that it would end its quantitative easing purchases by the end of the year, subject to data supporting its inflation outlook - which it revised upwards. It is a good time to ask why markets have become so tentative in their inflation expectations, and what that implies about the length of this business cycle and the path of rates." Click here to learn more.

Source: Neuberger Berman

Balancing the Positives

In his latest commentary, Blackstone’s Byron Wien opines on stocks, interest rates, politics, the central banks, inflation, regulation, as well as what he believes investors are too focused on, and what they are paying insufficient attention to. Click here for “Balancing the Positives”.

Source: Blackstone

Have MLP and Midstream Headwinds Shifted to Tailwinds?

"The midstream sector is in a position to benefit from several important tailwinds which market sentiment and equity valuations appear to underestimate. Further, we believe that as the broader energy markets continue to normalize, even at today’s commodity prices, these tailwinds may begin to attract greater investor interest and aid in the sector’s recovery." Click here to read more information about the midstream increasing business growth.

Source: OppenheimerFunds