Investment Insights Podcast: A quick review of July markets

Lowman_150x150px

Leigh LowmanInvestment Manager

On this week’s podcast (recorded August 11, 2017), Leigh provides a quick review of July markets.

 

Quick hits:

  • After a strong first half to the year, positive economic growth continued into July.
  • Second quarter earnings came in strong with both revenue and earnings surprises accelerating from already strong levels.
  • the Senate’s failure to pass a healthcare bill cast a shadow on the “Trump trade”, bringing forth concerns on whether meaningful tax and regulatory reform can be accomplished.
  • Overall economic data leans positive and we expect markets will continue to trend upward over the near term.

For Leigh’s full insights, click here to listen to the audio recording.

investment podcast (6)

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

 

Investment Insights Podcast: Will the drama in Washington, DC upend the economic recovery and market rally?

Holland_Podcast_150x126Tim Holland, CFA, Senior Vice President, Global Investment Strategist

On this week’s podcast (recorded June 2, 2017), Tim addresses a question top of mind for many investors.

Quick hits:

  • When it comes to politics, Brinker Capital is agnostic. Our focus is on understanding the economic and political environment we are operating in, while best positioning our portfolios regardless of the party in power.
  • We see the Trump Administration’s agenda as largely supportive of an optimistic outlook on the U.S. economy and market.
  • If Republicans fail in advancing their legislative agenda, risk assets should still benefit from two significant political tail winds:
    1. A more benign regulatory environment
    2. Certainty around federal tax rates
  • While the economic recovery and bull market are both long lived, we continue to see the weight of the evidence as supporting further expansion and price gains.

For Tim’s full insights, click here to listen to the audio recording.

shutterstock_9514525 (5)

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast: While we feel the weight of the evidence leans positive, risks remain

magnotta_headshot_2016Amy Magnotta, CFASenior Investment Manager, Brinker Capital

On this podcast (recorded January 31, 2017), Amy discusses Brinker’s outlook over the short-term and intermediate-term.

  • The recent actions of President Trump have resulted in an increase in short-term political risk.
  • As we’ve seen before, new presidents typically struggle to get their footing early on in their administration and equities tend to be weaker in February as a consequence.
  • Because of the short-term impact of the negative headlines, Trump may have to spend down some of his political capital now, which could impact his ability to get his full agenda passed in the future.
  • Our view remains constructive on risk assets in the intermediate term.

Click here to listen to the full podcast.

Source: Brinker Capital. Views expressed are for informational purposes only. Holdings subject to change. Not all asset classes referenced in this material may be represented in your portfolio. Indices are unmanaged and an investor cannot invest directly in an index. All investments involve risk including loss of principal. Fixed income investments are subject to interest rate and credit risk. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Brinker Capital Inc., a Registered Investment Advisor.

Investment Insights Podcast: Expectation for Positive Trend to Continue

Hart_Podcast_338x284Chris Hart, Senior Vice President

On this week’s podcast (recorded October 14, 2016), Chris provides a market update as we inch closer to the end of the year. Listen in as he discusses recent market performance and what we should look forward to.

Quick hits:

  • Dollar strength on the heels of a potential rate hike in December has been a headwind and weighed on stocks.
  • Despite being almost 90 months into a bull market with a 222% gain for the S&P 500, the second longest on record, the market is not showing many signs of topping out.
  • Stock valuations are elevated, but not alarmingly.
  • Our intermediate-term outlook remains positive and we don’t see many signs of recession in the near- to intermediate-term, but we do recognize that this a late-cycle bull market and risks remain.

For the rest of Chris’s insight, click here to listen to the audio recording.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast: The Reluctant Bull

Hart_Podcast_338x284Chris Hart, Core Investment Manager

On this week’s podcast (recorded August 19, 2016), Chris discusses the current market environment, the looming concerns for investors, and what to expect as we near the end of the summer cycle.

Listen to the podcast here, but first, a few quick hits:

  • Markets continue to move higher, leading experts to describe it as a “reluctant bull” with investors skeptical of the rally.
  • Concerns over oil, China, and the Federal Reserve continue to preoccupy the markets and are still worrisome, but perhaps less so than a few months ago.
  • Domestic stocks have risen in six of the last eight weeks thanks in part to more positive corporate results.
  • While the economy is late in the business cycle and not calling for an acceleration, the strength of the market is noteworthy.
  • As we enter the seasonally weak late summer period in the markets, uncertainty remains especially with the upcoming election.
  • Overall, we remain constructive on risk assets but cautious in our outlook and we maintain our focus on finding select opportunities to take advantage of.

For Chris’s full insight, click here to listen to the audio recording.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

June 2016 Monthly Market and Economic Outlook

Amy MagnottaAmy Magnotta, CFASenior Investment Manager, Brinker Capital

After a weak start to the month, risk assets finished May with strong returns. Despite increased rumblings for a mid-year Fed rate hike creating uncertainty in the market, climbing oil prices and strong housing data helped uphold investor confidence and worked as a catalyst for positive gains during the month. Corporate earnings generally beat analyst expectations, but overall earnings growth is still negative year-over-year. Markets were volatile and we expect this trend to likely continue as central bank actions continue to unfold and we move closer to the end of the business cycle.

The S&P 500 Index gained 1.8% for the month, finishing just shy of the all-time high reached in May 2015.  Sector performance was mixed. Energy, materials and industrials lagged for the month, but still remain in positive territory year-to-date. Technology, healthcare and financials sectors had strong performance with technology posting returns of over 5%. Growth outpaced value in large and small caps and was equivalent in mid cap. Small and micro cap stocks outperformed large cap stocks.

International equity markets lagged U.S. equity markets.  Although international equities experienced a similar pullback in the beginning of the month, the subsequent rally failed to pick up the same momentum as U.S. equities.  A strong dollar coupled with weak profit growth and uncertainty surrounding the potential Brexit were drags on performance.  Emerging markets lagged developed international equity markets; with almost all EM countries finishing the month in negative territory. In particular, Latin America posted double-digit negative returns resulting from political turmoil in Brazil.

The Barclays Aggregate Index was flat for the month with most sectors finishing either flat or in slightly negative territory. Treasury yields fell mid-month only to rise back up as the market began pricing in the possibility of another Fed rate hike. Treasury yields ended the month relatively unchanged from beginning levels and the investment grade credit was flat.  High yield spreads slightly contracted and the asset class eked out a small gain. Municipals also finished slightly positive.

We remain positive on risk assets over the intermediate-term; however, we acknowledge that we are in the later innings of the bull market that began in 2009 and the second half of the business cycle. The worst equity market declines are typically associated with recessions, which are preceded by aggressive central bank tightening or accelerating inflation, factors which are not present today. While our macro outlook is biased in favor of the positives and a near-term end to the business cycle is not our base case, the risks must not be ignored.

A number of factors we find supportive of the economy and markets over the near term.

Global monetary policy remains accommodative: The Fed’s approach to tightening monetary policy is patient and data dependent. The Bank of Japan and the ECB remain supportive.

Stable U.S. growth and tame inflation: U.S. economic growth has been modest but steady. While first quarter growth was muted at an annualized rate of +0.5%, we expect a bounce in the second quarter as has been the pattern. Payroll employment growth had been solid, but May’s report was disappointing. Wage growth has been tepid at best despite the tightening labor market, and reported inflation measures and inflation expectations, while off the lows, remain below the Fed’s target.

U.S. fiscal policy more accommodative: Fiscal policy is modestly accommodative in 2016, helping offset more restrictive monetary policy.

Constructive backdrop for U.S. consumer: The U.S. consumer should see benefits from lower energy prices and a stronger labor market.

However, risks facing the economy and markets remain, including:

Risk of policy mistake: In the U.S. the subsequent path of rates is uncertain and may not be in line with market expectations, which could lead to increased volatility. Negative interest rates are already prevalent in other developed market economies. An event that brings into question central bank credibility could weigh on markets.

Slower global growth: Economic growth outside the U.S. is decidedly weaker, and while China looks to be improving, a slowdown remains a concern.

Another downturn in commodity prices: Oil prices have rebounded off of the recent lows and lower energy prices on the whole benefit the consumer; however, another significant leg down in prices could become destabilizing. This could also trigger further weakness in the high yield credit markets, which have recovered since oil bottomed in February.

Presidential Election Uncertainty: The lack of clarity will likely weigh on investors leading up to November’s election. Depending on the rhetoric, certain sectors could be more impacted.

The technical backdrop of the market has improved, as have credit conditions, helped by a macroeconomic environment that leans favorable. Investor sentiment moved from extreme pessimism levels in early 2016 back into more neutral territory. Valuations are at or slightly above historical averages, but we need to see earnings growth reaccelerate. We expect a higher level of volatility as markets assess the impact of slower global growth and actions of policymakers; but our view on risk assets still tilts positive over the near term. Higher volatility has led to attractive pockets of opportunity we can take advantage of as active managers.

Source: Brinker Capital. Views expressed are for informational purposes only. Holdings subject to change. Not all asset classes referenced in this material may be represented in your portfolio. All investments involve risk including loss of principal. Fixed income investments are subject to interest rate and credit risk. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Brinker Capital Inc., a Registered Investment Advisor.

May 2016 Monthly Market And Economic Outlook

Amy MagnottaAmy Magnotta, CFASenior Investment Manager, Brinker Capital

Continuing the rally that began in mid-February, risk assets posted modest gains in April, helped by more dovish comments from the Federal Reserve and further gains in oil prices. Expectations regarding the pace of additional rate hikes by the Fed have been tempered from where they started the year. Economic data releases were mixed, and while a majority of companies beat earnings expectations, earnings growth has been negative year over year.

The S&P 500 Index gained 0.4% for the month. Energy and materials were by far the strongest performing sectors, returning 8.7% and 5.0% respectively. On the negative side was technology and the more defensive sectors like consumer staples, telecom and utilities. U.S. small and micro-cap companies outpaced large caps during the month, and value continued to outpace growth.

International equity markets outperformed U.S. equity markets in April, helped by further weakness in the U.S. dollar. Developed international markets, led by solid returns from Japan and the Eurozone, outpaced emerging markets. Within emerging markets, strong performance from Brazil was offset by weaker performance in emerging Asia.

The Barclays Aggregate Index return was in line with that of the S&P 500 Index in April. Treasury yields were relatively unchanged, but solid returns from investment grade credit helped the index. High-yield credit spreads continued to contract throughout the month, leading to another month of strong gains for the asset class.

We remain positive on risk assets over the intermediate-term; however, we acknowledge that we are in the later innings of the bull market that began in 2009 and the second half of the business cycle. The worst equity market declines are typically associated with recessions, which are preceded by aggressive central bank tightening or accelerating inflation, factors which are not present today.  While our macro outlook is biased in favor of the positives and a near-term end to the business cycle is not our base case, the risks must not be ignored.

A number of factors we find supportive of the economy and markets over the near term.

Global monetary policy remains accommodative: The Fed’s approach to tightening monetary policy is patient and data dependent.  The Bank of Japan and the ECB have been more aggressive with easing measures in an attempt to support their economies, while China may require additional support.

Stable U.S. growth and tame inflation: U.S. economic growth has been modest but steady. While first quarter growth was muted at an annualized rate of +0.5%, we expect to see a bounce in the second quarter as has been the pattern. Payroll employment growth has been solid and the unemployment rate has fallen to 5.0%. Wage growth has been tepid at best despite the tightening labor market, and reported inflation measures and inflation expectations, while off the lows, remain below the Fed’s target.

U.S. fiscal policy more accommodative: With the new budget, fiscal policy is poised to become modestly accommodative in 2016, helping offset more restrictive monetary policy.

Constructive backdrop for U.S. consumer: The U.S. consumer should see benefits from lower energy prices and a stronger labor market.

However, risks facing the economy and markets remain, including:

Risk of policy mistake: The potential for a policy mistake by the Fed or another major central bank is a concern, and central bank communication will be key. In the U.S. the subsequent path of rates is uncertain and may not be in line with market expectations, which could lead to increased volatility. Negative interest rates are already prevalent in other developed market economies. An event that brings into question central bank credibility could weigh on markets.

Slower global growth: Economic growth outside the U.S. is decidedly weaker, and while China looks to be improving, a significant slowdown remains a concern.

Another downturn in commodity prices: Oil prices have rebounded off of the recent lows and lower energy prices on the whole benefit the consumer; however, another significant leg down in prices could become destabilizing. This could also trigger further weakness in the high yield credit markets, which have recovered since oil bottomed in February.

Presidential Election Uncertainty: The lack of clarity will likely weigh on investors leading up to November’s election. Depending on the rhetoric, certain sectors could be more impacted.

The technical backdrop of the market has improved, as have credit conditions, while the macroeconomic environment leans favorable. Investor sentiment moved from extreme pessimism levels in early 2016 back into more neutral territory. Valuations are at or slightly above historical averages, but we need to see earnings growth reaccelerate. We expect a higher level of volatility as markets assess the impact of slower global growth and actions of policymakers; but our view on risk assets still tilts positive over the near term. Higher volatility has led to attractive pockets of opportunity we can take advantage of as active managers.

Source: Brinker Capital. Views expressed are for informational purposes only. Holdings subject to change. Not all asset classes referenced in this material may be represented in your portfolio. All investments involve risk including loss of principal. Fixed income investments are subject to interest rate and credit risk. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Brinker Capital Inc., a Registered Investment Advisor.

Investment Insights Podcast – Leading Indicators Report Strong Economy

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded April 1, 2016), Bill reports again on the importance of leading indicators and what they are showing in terms of the stability of the economy and if a recession is likely:

What we like: Investors should focus on leading indicators; good economic data to report: order rates for manufacturing strong; employment data continues to be positive; wages are increasing; recession happening this year becomes less likely with strong data from these leading indicators

What we don’t like: On the contrary, the strong data makes a larger case for higher interest rates; with wage and labor reports positive, Fed may act on their mandate and the interest rate discussion heats up

What we’re doing about it: Portfolios will maintain the theme of interest rate normalization

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast – Markets Elect to Follow History

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded March 24, 2016), Bill weighs in on the presidential election race and its impact, or lack there of, on the markets:

Quick takes:

  • The Wall Street Journal survey indicates about 76% of respondents feel this election is introducing more uncertainty into the markets.
  • Evercore ISI research frames the election less as Democrats vs. Republicans and more as unconventional vs. mainstream.
  • While there is heightened uncertainty strewn across media headlines, the market reaction has been typical of past open presidential election races.

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast – Jolting The Economy

miller_podcast_graphicBill Miller, Chief Investment Officer

On this week’s podcast (recorded March 10, 2016), Bill highlights the latest news out of Europe and China:

What we like: Mario Draghi and the ECB announced a number of pro-stimulus policies; banks supportive in lending to businesses; more quantitative easing supports sovereign debt markets; Draghi trying to be the backstop to support the economy; China’s Five-Year Plan focused on stimulating economy

What we don’t like: Market is realizing that pure monetary stimulus is not enough; there is a global oversupply and printing more money or having markets lend more money isn’t enough to offset; investors are hearing the rhetoric but looking for results

What we’re doing about it: Keeping the same mindset that there will not be a recession; looking for opportunities within high-yield and energy

Click here to listen to the audio recording

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.