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Investment Perspectives

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Investment Perspectives is a monthly publication which provides our market outlook as well as insight into the state of the economy.

IP-Header.JPGThis month’s issue features the following topics:

“Bend, But Don't Break" by Mark Luschini

U.S. equity prices have rallied smartly off the recent low in early February, but it may be too soon to declare this corrective phase over. It is not unusual for stock prices to retrace some or all of the gains made in the immediate aftermath of a deep pullback such as that which the market just experienced. While we believe the market will remain volatile as a consequence of a regime shift to a new period of higher interest rates and emerging inflation, neither this one, nor further pullbacks if they occur in the near future, should derail the bull market in stocks. In our view, the strength of the fundamental underpinnings for corporate earnings provided by the vigorous macroeconomic backdrop are the elixir for share prices to steady and ultimately resume their advance.

“The Fed's Evolving Policy Tools” by Guy LeBas

Three hikes or four? Does inflation matter or employment matter more? Do low interest rates help or hurt savers? For all the ink spent discussing, predicting, and criticizing Federal Reserve policy (or for that matter, central bank policy globally), we strategists rarely talk much about why monetary policy matters and how it influences the financial markets. With that in mind, it’s worth occasionally stepping back to look at those connections, which seem to have become quite powerful in the post-Global Financial Crisis world.

“A Temporary Detour on the Path to Higher Levels" by Greg Drahuschak

With the S&P 500 down 7.6% from its January 26th high of 2,872.87 and the ten-year Treasury note rate topping 2.95%, market sentiment turned sharply negative by mid-afternoon February 9—precisely at the time the S&P 500 reversed course to end the day up 3.43% from the session low, on its way to a 9.88% recovery by February 27th.

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