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.”
2018 is in the history books and, if anything, we were surprised at how little changed from the previous year. Unemployment was still at record low levels. Wages failed to increase significantly. Housing prices continued to skyrocket. And while some pundits were talking about the economy starting to slow down, economist John Mitchell assured us that the economy will continue to grow in 2019.
After six years of exceptionally low “turbulence,” volatility returned with a vengeance last year. We expect this bumpy flight path to persist as investors digest slowing economic expansion, materially lower earnings growth and broadening trade and political tensions.
As we look back on 2018, we can summarize the year as one where volatility emerged at the same time equity markets and the economy diverged enormously. In fact, 2018 is estimated to produce the strongest economic growth since the Global Financial Crisis at 3.0 percent.
While expectations were for the Fed to raise the federal funds rate by 0.25 percent, there was a small glimmer of hope that they may hold pat.
When the Federal Reserve meets next week, everyone will be waiting to hear what they have to say about future interest rate hikes.
With a week subdued by a day of mourning, traders hoped market volatility would follow suit: it did not. In less than three trading sessions the S&P 500 traded down five percent, the Dow Jones Industrial Average lost more than 1,400 points and small cap stocks lost 6 percent.
This weekend, many world leaders will travel to Buenos Aires, Argentina, for a meeting of the Group of Twenty, also known as, “G20.” Although the G20 does not have the power to enforce policies, the outcomes of G20 summits have been highly influential to global policy.
As the U.S. expansion draws closer to becoming the longest on record, a number of economic and political risks have emerged or intensified in recent months, leading to global equity market weakness.
It was a busy week in Washington with a highly anticipated midterm election followed by the Federal Reserve meeting. The results of both came in as expected although it seems the markets were not synced to that result.
As we expected at the beginning of the year, S&P 500 valuations have contracted year-to-date. Typically during an economic expansion, we see stocks move higher with earnings. Investors are willing to pay more for those earnings with the assumption that growth will continue.
On Wednesday this week the S&P 500 plunged by 3 percent on cumulative fears of slowing economic and earnings growth as well as concerns of a slowdown in China and the Federal Reserve being too aggressive in increasing short-term interest rates.
In recent weeks, the 10-year U.S. Treasury rose to three-and-a-quarter percent—a level not seen since 2011. In addition, the stock market sold off five percent from all-time highs, volatility has risen and the Chinese and European markets dipped. All this amid a backdrop of good corporate earnings and moderate-to-good economic news.
Global markets sold off sharply on Wednesday and Thursday as investors continued to wrestle with a diverse set of risks.
U.S. investors who enjoyed strong fourth quarter equity returns were dealt a change in market landscape this week. While history has demonstrated a low correlation between equities and U.S. government bonds – exactly the reason why Treasuries are such an important diversifier of equity risk -- this week proved to be an exception. Stock and bond prices both fell following news that the U.S. and Canada had reached agreement about modifying trade terms in North America.
