facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog search brokercheck brokercheck
%POST_TITLE% Thumbnail

Q3 2019 Investment Commentary

As we wind down the second quarter of 2019, all eyes have truly turned to the Federal Reserve and their July meeting. After a period of interest rate hikes, followed by a large market correction in late 2018, the Fed has turned surprisingly dovish – so much so that fixed income markets have “priced in” at least two rate cuts for the year. Only time will if the outcome continues to support our domestic markets in their ongoing attempts to post new highs, or remove some previous support. We continue to believe we are well positioned in the fixed income market, and have recently shifted slightly from a defensive equity to a pure bond play in many portfolios.

In US markets, equities continue to rise thanks to the low interest rate environment, share buybacks, and positive consumer sentiment. Political talk of tariffs is not without its effect, though the majority of those increases have not yet been passed on to consumers. International markets continue to remain sluggish relative to their domestic counterparts. Developed countries suffer from low population growth and difficulty in kick-starting real productivity gains, while emerging countries - which are generally export heavy – continue to have valuations weighed down by global trade policy uncertainty. In the long run, we continue to believe international, and particularly emerging markets, are attractive places to invest.

Finally, there is the question that has proved all-consuming to the financial press: when is a recession coming? To us, it can feel like the conundrum of the man asking the fortune teller where and when he would die – so he would know where not to be! We all know that people, like bull markets, are not immortal, and predicting the time and location of demise would only certainly move the time and location elsewhere. The Fed’s 180 seems to indicate that economists are seeing slowing of activity, and we also have the predictions from the fixed income market in the form of a partially inverted yield curve that rates may yet go lower still, but both of those signs are unreliable and often vague as to any timing. Importantly, we don't see imminent signs pointing to one of the three leading causes of recessions: commodity spikes, aggressive interest rate policy (hikes), or extreme equity valuations.

So what do we do? Our team aims to build portfolios that we believe are robust against a wide range of economic scenarios. Rather than time market swings, or “go to cash”, we believe that both up markets and down markets provide opportunities for companies to continue to find profitable markets, grow opportunities, and increase their value to their shareholders. We are always available to talk about the specifics of your portfolio, and any question you may have.

Opinions expressed are those of the author and not necessarily those of Raymond James Financial, Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Links are provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed web sites or their respective sponsors. Securities offered through Raymond James Financial, Inc. Services Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. McLaren Wealth Strategies is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc. Please add: The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Contributions to a DAF are irrevocable. Raymond James does not provide legal or tax advice. Taxpayers should seek advice based from an independent legal or tax professional prior to opening account. Commodities' investing is generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Asset allocation and diversification do not guarantee a profit nor protect against a loss. Debt securities are subject to credit risk. A downgrade in an issuer's credit rating or other adverse news about an issuer can reduce the market value of that issuer's securities. When interest rates rise, the market value of these bonds will decline, and vice versa.