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January 2012




Quarterly Economic Outlook
A Pivotal Year Ahead
By: James Solloway, CFA, Managing Director, Senior Portfolio Manager


The Global Portfolio Strategies Group recently released its fourth-quarter economic outlook. A summary of its conclusions
is provided below:

     Europe’s debt crisis will continue to fester, although the endgame–including a restructuring of the eurozone–is within
      sight.

     We expect recessionary conditions in much of Europe in the early part of next year.

     The U.S. should avoid a recession. However, as has occurred in each of the past two years, there will likely be growth
      scares that temporarily pull down equity prices.

     Emerging economies should continue to grow more quickly than developed markets, although the banking crisis in the
      eurozone will hurt the prospects of Eastern Europe.

     China’s slowing growth could depress growth rates elsewhere in Asia.

     SEI looks for another year of easy monetary policy in the U.S. and a further shift toward easing by the European
      Central Bank, as the latter combats recession and the impact of the sovereign debt crisis on the banking system.

     Even in a scenario where the eurozone remains intact, we believe the euro itself could come under substantial
      downward pressure.

     We expect inflation to remain mostly inactive for another year. However, unpredictable, high-impact events (so-called
      black swans), along the lines of last year’s Arab spring and Japanese earthquake/tsunami/nuclear meltdown, cannot be
      ruled out. Obvious candidates include an uncontrolled breakup of the eurozone, intensifying political and military
      tensions with Iran over its expanding nuclear capabilities and a political and economic collapse of North Korea in the
      wake of ruler Kim Jong Il’s death.

     In terms of active asset allocation, we took advantage of the pop in stock prices during the final quarter of 2011 to even
      up our stock/bond positioning relative to strategic weights in the portfolios over which we have discretion. However, we
      continue to favor high-yield fixed-income assets versus investment-grade and sovereign debt. Within equities, we are
      overweight U.S. large-cap versus international, and remain particularly cautious on Europe ex-U.K. We also believe the
      exchange value of the euro could be at risk.

A full-length paper is available if you wish to learn more about this timely topic.




SEI / Commentary / ©2011 SEI
This material is provided by SEI Investments Management Corporation (SIMC) for educational purposes only and is not
meant to be investment advice. The reader should consult with his/her financial advisor for more information. This material
represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of
future events, or a guarantee of future results. There are risks involved with investing, including possible loss of principal.
SIMC is a wholly owned subsidiary of SEI Investments Company.




445188 DOFU 1/12
The Centennial Group
511 South Washington Street
Lansing, MI 48933
information@refertcg.com
www.centennialgroup.com
(800) 999-9350




THE CENTENNIAL GROUP & ITS AFFILIATES ARE INDEPENDENTLY OWNED & OPERATED. SECURITIES AND INVESTMENT ADVISORY SERVICES
OFFERED THROUGH SECURIAN FINANCIAL SERVICES, INC. MEMBER FINRA/SIPC. CORPORATE OFFICE: • 511 SOUTH WASHINGTON AVENUE,
LANSING, MI 48933 • WWW.CENTENNIALGROUP.COM• 800-999-9350

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Sei A Pivotal Year Ahead

  • 1. January 2012 Quarterly Economic Outlook A Pivotal Year Ahead By: James Solloway, CFA, Managing Director, Senior Portfolio Manager The Global Portfolio Strategies Group recently released its fourth-quarter economic outlook. A summary of its conclusions is provided below:  Europe’s debt crisis will continue to fester, although the endgame–including a restructuring of the eurozone–is within sight.  We expect recessionary conditions in much of Europe in the early part of next year.  The U.S. should avoid a recession. However, as has occurred in each of the past two years, there will likely be growth scares that temporarily pull down equity prices.  Emerging economies should continue to grow more quickly than developed markets, although the banking crisis in the eurozone will hurt the prospects of Eastern Europe.  China’s slowing growth could depress growth rates elsewhere in Asia.  SEI looks for another year of easy monetary policy in the U.S. and a further shift toward easing by the European Central Bank, as the latter combats recession and the impact of the sovereign debt crisis on the banking system.  Even in a scenario where the eurozone remains intact, we believe the euro itself could come under substantial downward pressure.  We expect inflation to remain mostly inactive for another year. However, unpredictable, high-impact events (so-called black swans), along the lines of last year’s Arab spring and Japanese earthquake/tsunami/nuclear meltdown, cannot be ruled out. Obvious candidates include an uncontrolled breakup of the eurozone, intensifying political and military tensions with Iran over its expanding nuclear capabilities and a political and economic collapse of North Korea in the wake of ruler Kim Jong Il’s death.  In terms of active asset allocation, we took advantage of the pop in stock prices during the final quarter of 2011 to even up our stock/bond positioning relative to strategic weights in the portfolios over which we have discretion. However, we continue to favor high-yield fixed-income assets versus investment-grade and sovereign debt. Within equities, we are overweight U.S. large-cap versus international, and remain particularly cautious on Europe ex-U.K. We also believe the exchange value of the euro could be at risk. A full-length paper is available if you wish to learn more about this timely topic. SEI / Commentary / ©2011 SEI
  • 2. This material is provided by SEI Investments Management Corporation (SIMC) for educational purposes only and is not meant to be investment advice. The reader should consult with his/her financial advisor for more information. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. There are risks involved with investing, including possible loss of principal. SIMC is a wholly owned subsidiary of SEI Investments Company. 445188 DOFU 1/12 The Centennial Group 511 South Washington Street Lansing, MI 48933 information@refertcg.com www.centennialgroup.com (800) 999-9350 THE CENTENNIAL GROUP & ITS AFFILIATES ARE INDEPENDENTLY OWNED & OPERATED. SECURITIES AND INVESTMENT ADVISORY SERVICES OFFERED THROUGH SECURIAN FINANCIAL SERVICES, INC. MEMBER FINRA/SIPC. CORPORATE OFFICE: • 511 SOUTH WASHINGTON AVENUE, LANSING, MI 48933 • WWW.CENTENNIALGROUP.COM• 800-999-9350