Monthly Economic Update February 2017: Markets Still Propped Post-Election


As with January, investment markets were well-behaved in February. All major asset classes added to year-to-date gains. Notable was the dichotomy of currency impacts on foreign markets. Dollar movement was a modest negative for developed markets, but a strong positive for emerging economies. Growth stocks continued to outperform value in February. Likewise, larger companies have modestly outperformed their smaller counterparts in 2017.

This year’s favorable investment dynamics are often ascribed to U.S. election results. Indeed, political changes in Washington are likely causal in many respects, particularly when it comes to certain market sectors such as Financial and Industrials. That said, investors should recognize and appreciate the foundation for market gains is broader based than what has been dubbed the “Trump Rally.” Global purchasing managers surveys have been strong, inflation has ticked higher, and wage growth has improved. Consumer confidence also hit a post crisis high in February and retail sales have been healthy. As for corporate fundamentals, the S&P 500 index has put up two quarters of revenue growth (absent in recent years) and the same is expected in the first quarter. Finally, Federal Reserve rhetoric, suggesting both a near-term hike and the potential for a faster pace of tightening, reinforces a picture of improving growth.

Economic Data

Market Returns

Disclaimers

This commentary was written by Robert W. Lamberti, CFA, VP and Co-CIO of Summit Equities, Inc. and Summit Financial Resources, Inc. Source of performance: Morningstar®. Indices are unmanaged and cannot be invested into directly. The investment and market data in this newsletter is not an offer to sell or purchase any security or commodity. Past performance does not guarantee future results. The Barclays Capital U.S. Aggregate Bond Index is a market capitalization-weighted index comprising Treasury securities, Government agency, mortgage-backed, corporate, and some foreign bonds traded in the U.S. The Barclays Capital Municipal Bond Index covers the U.S. dollar-denominated long-term tax exempt bond market. The Barclays Capital Global Aggregate ex. U.S. Bond Index measures the performance of global investment grade fixed-rate debt markets excluding USD-dominated securities. The Bloomberg Commodity Index measures the performance of the commodity sector representing an unleveraged, long-only investment in commodity futures. The Dow Jones U.S. Real Estate Index measures the performance of the real estate sector of the U.S. equity market, including real estate holding and development companies and Real Estate Investment Trusts. The Wilshire 5000 Total Market Index measures the performance of all U.S. headquartered equities with readily available price data. It is market capitalization-weighted and is designed to track the overall performance of the U.S. stock markets. The S&P 500 Index is a market capitalization-weighted Index of 500 widely held stocks often used as a proxy for the stock market. The Russell 2000 Index measures the performance of the small cap segment of the U.S. equity universe. The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure the performance of developed markets, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index designed to measure global emerging markets performance. Information throughout this Newsletter or any other statement(s) regarding markets or other financial information, are obtained from sources which we, and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the reader. To unsubscribe from this investment newsletter please reply to this email with “unsubscribe” in the subject. Opinions expressed are subject to change without notice and are not intended as investment advice or a guarantee of future performance.  Consult your financial professional before making any investment decision. Securities and Investment Advisory Services offered through Summit Equities, Inc. Member FINRA/SIPC, and Financial Planning Services offered through Summit Equities, Inc.’s affiliate Summit Financial Resources, Inc. 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600, Fax: 973-285-3666.

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