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Market Perspectives - March 2019


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Market Perspectives - March 2019

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Market Perspectives - March 2019

  1. 1. Market Perspective – March 2019 Experience Insight Impact Overview: With the current bull market having celebrated its 10th anniversary this month, we reflect on the broad themes which have driven and continue to drive stocks higher. Investors have repeatedly echoed the phrase “Goldilocks” to describe the past decade. Economic conditions have exhibited growth which is “not too fast, not too slow, but just right,” allowing inflation to remain benign and, accordingly, interest rates to stay low. This month we explore these characteristics. 1
  2. 2. Stable Prices, Low Unemployment Experience Insight Impact The above chart demonstrates that since the financial crisis, unemployment has steadily fallen and inflation has remained low, roughly around the Federal Reserve’s target of 2%. Source: Bloomberg 2
  3. 3. Low Inflation Generally Allows Interest Rates to Remain Low Experience Insight Impact Because inflation remains low, Federal Reserve policy makers maintained low interest rates for many years. While recently rates have creeped higher, this “normalization” may be winding down and Fed policy remains accommodating. Source: Bloomberg 3
  4. 4. Convergence of Unemployment & Wage Trends Experience Insight Impact Unemployment continues to trend lower and wage growth is only gradually increasing. So far, the Federal Reserve has not been overly concerned. 4 Source: Bloomberg
  5. 5. Real Wage Increases Remain Stubbornly Low Experience Insight Impact While we have seen some recent signs of improvement, real wage inflation, a particularly important barometer watched by the Federal Reserve, remains subdued. 5 Source: Bloomberg
  6. 6. GDP Growth Remains Reasonable Experience Insight Impact U.S. GDP growth remains fairly consistent and within a desired range of long-term growth. Source: Bloomberg 6
  7. 7. Market Perspective – March 2019 Experience Insight Impact Conclusion: While no investor can predict the future, looking through a historical lens can provide valuable perspective. In this case, market participants are weighing the future likelihood of low inflation and sustainable economic growth with a relatively benign interest rate environment. We are closely monitoring developments in this aging bull market for signs of change and will react accordingly. 7
  8. 8. Disclaimer Experience Insight Impact Opinions expressed in this commentary may change as conditions warrant and is for informational purposes only. Information contained herein is not intended to be personal investment advice for any specific person for any particular purpose. We utilize information sources that we believe to be reliable but cannot guarantee the accuracy of those sources. Past performance is no guarantee of future performance; investing involves risk and may result in loss of capital. Consider seeking advice from a professional before implementing any investing strategy. 8