George Hosfield, CFA, discusses Ferguson Wellman's quarterly strategy titled, "Inflation's Flame Flickers," which addresses the narrow market leadership, the impact of higher interest rates on inflation and how assets are priced at this stage of the economic cycle.
George Hosfield, CFA, discusses the firm's quarterly strategy titled "Stalemate," which highlights the Fed's ongoing battle to tame inflation along with our views on the health of the banking industry and capital market expectations for the balance of the year.
Director and Chief Investment Officer George Hosfield, CFA, discusses the Fed raising interest rates, peaking inflation and our view on equities and volatility across all asset classes in our Investment Strategy titled, “Balancing Act.”
Charles Dicken’s iconic tome illustrates aptly the interplay between earnings news and economic news of late. Every day it seems good earning news is complemented with slowing economic news and vice versa. Recent market volatility has pushed cautious investors to the sidelines and those that remain are riding the markets up and down with every recent news release.
Stock markets were essentially flat for the week, but individual stocks gyrated with earnings announcements. Economic data continues to be solid, but not spectacular. First quarter U.S. GDP came in at 2.3 percent, marking the fastest first quarter growth since 2015. Interest rates were essentially unchanged for the week as well.
Stocks and bonds moved in opposite directions as the S&P 500 finished positive on the week despite falling nearly 2 percent between Thursday and Friday. Bonds, on the other hand, declined due to higher interest rates.
With this week’s latest rebound, the S&P 500 has now closed up or down more than 1 percent 27 times year-to-date ‒ this is more than three times the daily volatility that investors experienced in 2017. Accompanying higher stock prices, safe-haven bonds retreated modestly.
Mary Lago, CFP, CTFA, was honored at the Portland Business Journal’s annual Women of Influence award.
With trade tensions picking up, the S&P 500 experienced a wild ride this week, ending the week declining more than 1 percent. The first week of trading in the second quarter experienced huge intraday swings, highlighted by Wednesday’s volatility.
The S&P 500 put up strong gains into the holiday and finished up 2 percent for the week. This quarter has been marked by the return of volatility with the market posting daily gains or losses in excess of 1 percent on 22 different occasions. To put this in perspective, there were just eight of these instances in all of 2017.
In the face of unquestionably strong economic data, global equities declined nearly 5 percent on the week with the S&P 500 falling close to 6 percent. The sharp selloff can be attributed to a confluence of factors, none of which will have any impact on near-term earnings momentum.
Investment advisers offer positive outlook to Central Oregon clients
A Portland-based investment manager reassured high-net-worth clients in Bend on Tuesday evening that good times will continue this year, but the audience met that outlook with skepticism and questions.
U.S. factory production exceeded growth expectations and the University of Michigan consumer confidence survey came in at a 14-year high, helping U.S. stocks to break out of their four-day slump (triggered by tariffs and White House turmoil). However, it won’t be enough to turn in positive numbers for the week.
Strong economic data led the market to big gains this week, despite President Trump’s tariff announcement. The S&P 500 was up over 3 percent, while bond yields were quiet on the week. Volatility has indeed returned to the market with three-out-of-five days experiencing more-than-1-percent swings in value.
For the week the equity markets were lower by more than three percent as investors reacted to the news that President Trump intends to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports fueling fear of protectionist economic policy.
Global equity markets were up slightly this week after the U.S. experienced its greatest one-week gain since 2011 in the previous week. Interest rates took a pause in their upward move with the 10-Year Treasury flat on the week at 2.87 percent.
Following the stock market’s first correction since the Chinese growth scare two years ago, blue-chip stocks have rebounded furiously, producing the best week of returns since December of 2011. Investors spooked by the rapid descent of stock prices earlier this month are now scrambling to get back in.
The S&P 500 officially entered correction mode this week, pulling back approximately 10 percent from the January highs.
NOTE: This communication was originally sent to clients on February 5, 2018.
As we entered 2018 our expectations were for the market to be positive for a 10th consecutive year, but we felt that volatility would return. In the past week, market volatility has returned in a big way. Since January 26, the S&P 500 is down 7.5 percent. This represents the biggest selloff since the China growth scare of January 2016. This correction takes the S&P 500 to negative-1 percent for the year.
Market corrections within bull markets are a common occurrence, yet never pleasant. In our Investment Outlook this year we highlight the difference between a market correction and a bear market. The chart below shows that when a correction occurs in a growing economy the average market selloff is about 13 percent, and it takes about six months to return to even. When a market correction is associated with a recession, the market drops an average of 34 percent and it can take up to three years to get back to even. We believe this is a correction, and not a bear market.
The irony of this selloff is there just may be too much good economic news. The market is selling off over the concern that growth and inflation will accelerate, causing the Fed and possibly other central banks around the world to tighten more than is expected. The market is undergoing an adjustment of expectations around rate hikes and interest rates. Our view is that interest rates will go up this year, but not enough to slow global economic growth.
Recent volatility is not causing us to change our stance on asset allocation. We remain neutral in our clients’ target stock-to-bond ratio. If there is cash in a portfolio that is waiting to be invested, we are using this pullback as an opportunity to deploy that cash. We urge clients to remain patient in the face of market volatility. While we don’t know how long this selloff will last, we do know that selling into weakness is rarely, if ever, a good decision. We continue to believe the S&P 500 will be higher at the end of the year, but volatility has returned.
If you have any questions or concerns, please contact your portfolio manager.
This week we experienced something we haven’t in some time: a down week. Stocks struggled to a close, down 3.8 percent with no help from blue-chip names. Alphabet (GOOGL) and Apple reports weren’t favored by Wall Street, driving the stocks down 5.2 and 4.3 percent, respectively.
