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Market Perspectives October 2017

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Market Perspectives October 2017

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Market Perspectives October 2017

  1. 1. Market Perspective – October 2017 Experience Insight Impact Overview: As the markets reach new all-time highs and historically low volatility remains, investors wonder what factors might be driving the rally. In this month’s issue, we explore and discuss possible reasons for the steadily rising markets.
  2. 2. Earnings Turnaround Experience Insight Impact 1 The past few quarters of sales and earnings growth ended nearly two years of negative trends. Future expectations suggest this growth will persist.
  3. 3. Low Inflation Helps To Keep Rates Low Experience Insight Impact 2 Low inflation allows central bank policies to remain accommodative, while also allowing interest rates to remain historically low. 10-Yr Yield Core Inflation
  4. 4. Accommodative Global Central Bank Policies Experience Insight Impact 3 The Bank of Japan (BOJ) maintains their asset purchases and the European Central Bank is (ECB) likely to extend theirs.
  5. 5. Synchronized Global Growth Experience Insight Impact 4 As shown in the charts above, all major geographical regions are experiencing positive growth for the first time since 2010. Source: Citi Research, Factset Source: Bloomberg, UBS Research
  6. 6. U.S. GDP Growth Remains Steady Experience Insight Impact 5 Source: JPMorgan • Some economists argue that, in recent years, roughly 2% of U.S. GDP growth has been “not too hot and not too cold, but just right,” allowing markets to continue an upward march. • Prolonged rapid growth might prompt higher rates, while lower growth could provoke economic fears.
  7. 7. Potential Policy Tailwinds Experience Insight Impact 6 Source: JPMorgan Prospects of favorable policy tailwinds, such as lower corporate tax rates and a repatriation holiday, could boost earnings and spark M&A activities, as well as further share buybacks.
  8. 8. Market Perspective – October 2017 Experience Insight Impact 7 Conclusion: Various forces are pulling markets higher, with an unprecedented lack of volatility. While these stabilizing forces will ultimately come to a close, investors should remain flexible in their approach, always seeking to couple return opportunities with proper risk dynamics.
  9. 9. Disclaimer Experience Insight Impact 8 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.

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