Investment Insights Podcast: April 2018 market and economic outlook

Leigh Lowman, CFA, Investment Manager

On this week’s podcast (recorded April 13, 2018), Leigh provides a brief review of March markets.

 

Quick hits:

  • After a tumultuous quarter, most asset classes ended slightly negative.
  • The S&P 500 Index finished the quarter slightly negative with sector performance largely negative.
  • Developed international equities were negative for the quarter, underperforming domestic equities.
  • Rising interest rates and fears of inflation led to volatile conditions for fixed income markets during the first quarter.
  • Despite the volatility experienced recently, we remain positive on risk assets over the intermediate-term.

Listen_Icon  Listen to the audio recording.

Read_Icon  Read the full April Market and Economic Outlook.

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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: A review of 2017 markets

Leigh Lowman, CFA, Investment Manager

On this week’s podcast (recorded January 5, 2018), Leigh provides a quick review of the markets over the past year.

 

Quick hits:

  • 2017 was quite the year. After a prolonged period of sluggish economic growth, 2017 was marked by synchronized global expansion across all major economies.
  • The S&P 500 Index finished the year up 21.8%.
  • Developed international equities underperformed domestic equities for the fourth quarter but led for the year.
  • Treasuries and government bonds were flat for the quarter as rising 10-year Treasury yields and an additional 25bps Fed rate hike created headwinds for the sectors.
  • We remain positive on risk assets over the intermediate-term.

Listen_Icon  Listen to the audio recording.

Read_Icon  Read the full January Market and Economic Outlook.

 

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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: US vs. International

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

On this week’s podcast (recorded December 15, 2017), Tim discusses why Brinker Capital has a bias toward US equities relative to developed international equities.

Quick hits:

  • Our clients are US based; they make their money in US dollars, they save in US dollars and they spend in US dollars.
  • Primarily because of the currency dynamic, international stocks are more volatile.
  • From an investment and relative attractiveness perspective, we would first say we don’t dislike developed international equities, we simply like US equities more, on both a near term and long-term basis.
  • Brinker Capital has been overweight emerging market equites since 2016.

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

 

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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. Emerging markets generally do not have the level of market efficiency and strict standards in accounting and securities regulation to be on par with developed economies, but emerging markets will typically have a physical financial infrastructure including banks, a stock exchange and a unified currency. Brinker Capital, Inc., a Registered Investment Advisor.

Investment Insights Podcast: A review of November markets

Lowman_150x150px

Leigh Lowman, CFA, Investment Manager

On this week’s podcast (recorded December 8, 2017), Leigh provides a quick review of October markets.

 

Quick hits:

  • After a short pause in the beginning of the month, it was more of the same for equity markets as the investment themes that have been apparent for most of the year were again evident throughout November.
  • The S&P 500 Index was up 3.1% in November.
  • Developed international equities were up 1.1%, underperforming domestic equities for the second month in a row.
  • Emerging markets were up 0.2% for November.
  • Fixed income was down in November with most sectors posting negative returns.

Listen_Icon  Listen to the audio recording.

Read_Icon  Read the full October Market and Economic Outlook.

 

market outlook

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 4th best in terms of return, and the 2nd longest in terms of duration

Hart_Podcast_338x284Chris Hart, Senior Vice President

On this week’s podcast (recorded February 3, 2017), Chris talks about the recent choppiness of the markets and how most major averages continue to trade near their highs.

Quick hits:

  • From an equity perspective, markets have been unsteady recently given uncertainty surrounding the new administration’s policy implementation and agenda which have stirred up more volatility.
  • We believe there is room to move higher because there are not too many traditional indictors that are flashing red at this point in time.
  • Developed markets and emerging markets have posted slight declines recently, but EM rebounded form a weak 4Q and is outperforming developed markets year to date in 2017.
  • The aggregate bond index has performed in line with high yield recently, but High yield remains well ahead of the aggregate index year to date.
  • Overall, we believe the opportunity ahead for risk assets in 2017 is positive, but we remain mindful of increasing macro and geopolitical uncertainties.

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: Markets have taken a little bit of a breather

Hart_Podcast_338x284Chris Hart, Senior Vice President

On this week’s podcast (recorded December 22, 2016), Chris is back discussing how directionally many of the trends remain in place as the rotation into equities from bonds continues.

Quick hits:

  • The markets consolidated a bit as Financials and Industrials leadership paused, while previously oversold sectors like Utilities and Healthcare, performed better.
  • International equity performance has proved more challenging.
  • A surprise came from the “dot plot” positioning that was more hawkish than anticipated due to a projected three additional rate hikes in 2017 instead of two.
  • Overall, we remain constructive on the opportunity ahead heading into 2017.

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: Seasonally Stronger Markets Ahead

Hart_Podcast_338x284Chris Hart, Core Investment Manager

On this week’s podcast (recorded September 16, 2016), Chris provides a fresh market update as volatility has picked up recently. Listen in as he discusses market performance and what’s to come in the fourth quarter.

Quick hits:

  • Returns are positive for most segments of the markets; however, volatility has picked up recently and equities have declined over the past week or two
  • This is typically a weak part of the calendar year for the markets, but this soft period should be behind us soon as mid-October typically marks the end of this softer stretch in the markets before seasonally stronger fourth quarter takes hold
  • A rate hike can’t be discounted completely and could be a shock to the markets if it happens.

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: Outlook Positive Despite Rate Hike Possibility

magnotta_headshot_2016Amy Magnotta, CFASenior Investment Manager, Brinker Capital

On this week’s podcast (recorded September 9, 2016), Amy reviews how the markets performed during August and provides an outlook to what’s ahead. Here a few quick hits before you listen:

  • August was a relatively calm month for financial markets. Large cap developed market equities eked out small gains, while emerging markets, high-yield bonds and small caps fared better.
  • U.S. economic data releases have been mixed, but lean positive. Yet, with better economic data comes the possibility of an additional Fed interest rate hike sooner rather than later.
  • While the possibility of a rate hike could adversely affect markets in the near term, it doesn’t change our positive intermediate-term outlook.
  • Risks facing the economy include the potential for a central bank policy mistake, uncertainty surrounding the upcoming presidential election, and disappointing economic growth outside of the U.S.
  • We expect higher volatility to continue as we digest the actions of global central banks, but our view on risk assets still tilts positive over the intermediate term. Increased volatility often leads to pockets of attractive opportunities.

Click here to listen to Amy’s full 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.

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 – Japan: Sunset on the Horizon?

Stuart Quint, Investment Insights PodcastStuart P. Quint, CFA, Senior Investment Manager & International Strategist

On this week’s podcast (recorded April 29, 2016), Stuart puts the focus on Japan and their struggling economy especially on the current political climate and its economic impact.

Why talk about Japan?

  • It’s the third largest economy in the world.
  • It’s one of the world’s leading lenders to the rest of the world, including the U.S.
  • Political fallout and economic downside loom if monetary easing policy is not accompanied with fiscal progress.

What’s the latest?

  • On April 27, the Bank of Japan decided not to add to currently high quantitative easing, greatly disappointing the markets.
  • The Japanese Yen appreciated over 2% (versus the U.S. dollar), that’s a negative given that two-thirds of the equity market is based towards overseas earnings.

How did Japan get here?

  • Back in 2013, Shinzo Abe inspired hope to reinvigorate the economy through the three arrows: monetary policy, fiscal stimulus, and structural reform.
  • The reality is there has been little-to-no follow through on fiscal policy or structural reform.
  • Bank of Japan has created a massive QE program, owning one out of every three long-duration government bonds.

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So, did the quantitative easing measures work?

  • QE helped asset prices, but did not reset inflationary expectations nor economic growth (GDP around 1%).
  • Japanese corporations aren’t investing back into Japan, but rather overseas.
  • Negative interest rates have resulted in a deceleration in bank lending.

That’s not great, but what does that mean exactly?

  • Failure in Japan could also have implications for global markets.
  • Despite stagnant growth for parts of the last three decades, Japan remains the third largest economy and second largest equity market.
  • Japan is also one of the largest holders of U.S. Treasuries.

Shoot me straight here, has Japan entered into the “sunset” phase?

  • It appears likely that Japan still has liquidity to muddle through its problems for now, but one cannot rule out a more negative scenario with the latest inaction and failure to improve the economy.
  • Fiscal stimulus could come in light of the recent earthquake, but progress on tax code reform and increased spending would provide longer-lasting relief.
  • One potentially negative scenario could come in July if a larger-than-expected victory for the opposition happens–this could lead to general elections and the departure of Abe causing policy uncertainty and higher volatility.

Please click here to listen to the full 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, a Registered Investment Advisor.