Daily Insights

• The Federal Reserve (Fed) announced the nomination of Richard Clarida as vice chairman of the Board of Governors. The makeup of the Fed Board continues to suggest a moderate blend of “gradualists” that we believe will continue to support existing policy and the equity markets as the leadership transition continues from Janet Yellen to Jay Powell. Remember, the “great rotation” from bonds to equities has not yet begun.

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The S&P 500 Index continues to find support near its 200-day moving average and recently bounced near the early February lows. Additionally, the retest of the February lows took place on lower volume, which is a positive sign that we could be nearing the end of this bottom process. Continue reading →

Daily Insights

• Earnings season kicks into high gear this week. Reports ramp up this week with about 15% of consensus S&P 500 Index firms reporting results. Despite the lackluster response to financial companies’ results on Friday, we continue to expect a strong earnings season, driven by solid global economic growth, robust manufacturing activity, a weaker U.S. dollar, and benefits from the new tax law. Consensus expects S&P 500 earnings to increase 18% year over year, with increases in all 11 S&P sectors. As a reminder, last week’s Weekly Market Commentary previews earnings season in more depth.

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Weekly Performance

US: S&P 500 Index +2.0%, Dow +1.8%, Nasdaq +2.8%
Europe: STOXX Europe 600 +1.17%, German DAX +1.64%, France CAC 40 +1.08%, U.K. FTSE 100 +1.04%
Asia: Japan Nikkei +.98%, China Shanghai Composite +.89%, Korea KOSPI +1.05%
Rates/Commodities: 10-Year Treasury yield +5 basis points to 2.82%, WTI crude oil +8.41%, COMEX gold +.87%

Though global trade remains firmly on the radar and rising tensions surrounding Syria were notable, a mixed bag of global economic data garnered much of investors’ attention ahead of earnings reports from a string of major financial firms that kicked off first-quarter earnings season. Continue reading →

As we noted back in January, midterm election years tend to be relatively volatile periods—with stocks historically seeing the largest intra-year pullbacks.

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Daily Insights

• Earnings season kicks off. First quarter earnings season officially kicks off today. And though Friday the 13th isn’t normally considered lucky, we expect this earnings season to be another strong one, driven by solid global economic growth, robust manufacturing activity, a weaker U.S. dollar, and the benefits from the new tax law. Consensus expects S&P 500 Index earnings to increase 18% year over year, with increases in all 11 S&P sectors. As a reminder, this week’s Weekly Market Commentary previews earnings season in more depth. Reports ramp up next week when about 15% of consensus S&P 500 firms will be reporting.

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Daily Insights

• EM continues to hold up well despite risks. Year to date, the MSCI Emerging Markets (EM) Index has returned 1.8%, ahead of both the developed international equity benchmark (MSCI EAFE Index), which has returned 0.5%, and the S&P 500 Index, which has lost 0.6%. This performance is encouraging given the backdrop of rising trade, geopolitical, and interest rate risks.

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The recently released March readings for the Consumer Price Index (CPI) and Producer Price Index (PPI) both moved higher. Headline CPI, which measures the prices that consumers pay for a variety of goods and services, hit 2.4%, while the core reading, which removes the impact of food and energy prices, came in at 2.1%. Continue reading →

Daily Insights

• Inflationary pressures broad, but scale still manageable. Recently released core inflation data (ex-food and energy components) for U.S. consumers (+2.1%) and producers (+2.7%) failed to garner significant attention from investors over the past two days. With tightening labor market conditions, fiscal stimulus with the economy already growing ahead of potential, and continued dollar weakness (among other drivers), inflation appears to remain manageable. In addition, the readings, though above 2.0%, are unlikely to have a meaningful impact on the Federal Reserve’s preferred inflation measure, the personal consumption expenditure (PCE), amid offsetting price movements in key areas–increases in physician services were offset by lower hospital costs, for example. And with the most recent PCE Index reading at 1.6%, the (modest) pickup in price momentum is more welcoming than worrisome.

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“In the book of life, the answers aren’t in the back.” Charlie Brown

Markets are not easy to navigate, as fear and greed can often get in the way of prudent investment decisions. As much as we would like a script to follow, it isn’t that simple. Much like the quote from Charlie Brown on life, there is no clear answer as to how markets will bottom. Continue reading →