Week of May 22, 2017: HCM Market Insights The Trump Bust? Last week's big news was Wednesday’s 372 point decline in the Dow. Traders worried that this latest political controversy would mean the Trump administration would not be able to follow through on their proposed pro-growth policies such as tax reform, repatriation and infrastructure spending. In reality, an expensive stock market was looking for a reason to let off a little steam and the political scuffle of the day served the purpose.
Week of May 8, 2017: HCM Market Insights Sell In .... May? Although HCM remains fully invested at our neutral risk targets, it is no secret that we view the markets as expensive. And while softer data continues to show strong readings, the economy’s actual progress has slowed in recent weeks. We need to see a continuation of progress in hard economic data, like Friday’s surprisingly strong jobs report, to justify the elevated levels of consumer sentiment, business optimism and stock prices. We are encouraged by many positive developments, but remain very risk-aware given elevated valuations, low yields and the many policy and geo-political uncertainties that remain.
Week of April 24, 2017: HCM Market Insights What Could Trip the Bull? There appears to be a very low risk of recession at this time even though we are well beyond the average length of U.S. economic expansions (the current expansion started in 2009 while the average expansion since 1854 has lasted about 39 months). With most measures of economic confidence and employment doing well, one might assume that the economy is firing on all cylinders. Unfortunately, the hard facts don’t yet confirm the softer data.
Week of April 10, 2017: HCM Market Insights Are Markets Too Optimistic? While the market has stalled out over the last few weeks, economic data around most of the world has been getting stronger. Consumer confidence is strong and we are moving beyond the point where central banks dominate the markets to where fiscal policy, tax reform, nationalism, and deregulation have more impact.
Week of March 27, 2017: HCM Market Insights Are We In A Correction Now? Recently, global equities have struggled for direction, with most markets and sectors refusing to confirm the latest highs set in major indices. The Administration’s failure on Friday to move forward with health care reform may be revealing internal divides that could make meaningful tax and regulation reform more difficult. If the markets see this as a risk it could be a trigger for correction.
Week of March 13, 2017: HCM Market Insights Where Has All the Fear Gone? The bull market celebrated its eighth birthday last Wednesday. The market bottomed on March 9th, 2009 closing 57% below its previous high. Investors were scared to death then.
Week of February 27, 2017: HCM Market Insights How Long Will the Rally Last? Improving growth prospects and a reflationary trend are reinforcing HCM’s intermediate-term view. And while our intermediate view is optimistic, our risk antennae are twitching.
Week of February 13, 2017: HCM Market Insights Last week we began to unwind a bit of our overweight allocation to smaller-cap stocks. This follows a year where small stocks were one of our top performing asset classes. However, we have some doubts about the ability of smaller companies to maintain their recent trend of outperformance.
Read the Full Market Commentary Here
Week of February 6, 2017: HCM Market Insights The Dow broke 20,000 last week – for the second time. The backing and filling we have seen in the markets recently is a normal digestion process to be expected after the rapid jump in prices that occurred in the weeks following the election
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Week of January 30, 2017: HCM Market Insights The biggest event at HCM last week was our 2017 Outlook Event where we hosted Jeffrey Kleintop, Schwab’s Chief Global Strategist, to hear his market forecast for 2017. We also shared HCM’s views about how and why our portfolios are positioned as they are.
Read the Full Market Commentary Here
Week of January 23, 2017: HCM Market Insights Just a reminder that tomorrow, 1/24, HCM is hosting its 2017 Economic Outlook client event. If you would like to receive the materials presented at this event, please contact Diane by e-mail at email@example.com.
Read the Full Market Commentary Here
Week of January 9, 2017: HCM Market Insights The most awaited economic statistic of the month is the employment report. Friday’s results showed a gain in December of 156,000 jobs. With positive revisions for November, the latest results pleased analysts who believe the report points toward continued growth.
Read the Full Market Commentary Here
Week of December 19, 2016: HCM Market Insights The big news last week focused almost exclusively on the changing interest rate policy following the low interest rates (monetary stimulus) that have been the driving force behind our economic and market recoveries in the years since the recession bottomed in 2009.
Read the Full Market Commentary Here.
Week of December 12, 2016: HCM Market Insights Since the U.S. election, we have seen strong performance in stocks and weakness in bonds as the long awaited increase in interest rates has finally begun. Considering the magnitude of these moves, it is fair to ask if prices have moved too far too fast or if both stock and bond prices will continue to move.
Week of December 5, 2016: HCM Market Insights Tax Savings for Everyone! In light of the recent election and Republican control of Congress, 2017 could present planning opportunities that almost every American can take advantage of. That is because the new administration’s tax plan, if enacted, will reduce the top marginal rate for almost all taxpayers.
Week of November 28, 2016: HCM Market Insights One of the hallmarks of HCM’s portfolio structure is broad global diversification. The objective of diversifying is to help insulate HCM portfolios against extreme downside volatility in order to enhance the potential for larger sustainable distributions over time.
Week of November 21, 2016: HCM Market Insights HCM’s concern for the market is drawn from a combination of fundamentals, including stretched valuations, sluggish sales growth, and unsustainable profit margins. While there are plenty of culprits to blame for our lackluster economic recovery, restrictive fiscal policy is a big one.
Week of November 14, 2016: HCM Market Insights Now that the election is behind us, the markets will have an opportunity to return their focus to the forces that drive economic fundamentals. In thinking about how that may play out, it is important to realize that recent economic and market data have been encouraging.
Week of November 7, 2016: HCM Market Insights The markets have been experiencing a modest decline since early September when election season began to heat up. Today, markets broke that trend following the FBI’s most recent email revelations. As we have written here before, it is normal to see markets suffer when uncertainty (political or financial) is building. It is also normal to see markets move in a positive direction when that stress is dialed back.
Week of October 31, 2016: HCM Market Insights As both the election season and the calendar year are coming to an end, HCM’s investment team has been busy with the annual housekeeping duties of tax-loss harvesting. We are completing our first pass now, and will review accounts on two more occasions as December 31 approaches.
Week of October 24, 2016: HCM Market Insights HCM believes that the combined effects of a more stable dollar and recovering oil prices are positive for the U.S. economy. This improving situation will, we believe, begin to manifest itself in modestly improving earnings reports.
Week of October 17, 2016: HCM Market Insights HCM continues to hold a modest overweight to equities and credit risk as we look through some of the recent market turmoil as the U.S. economy continues its slow growth trajectory. HCM continues to favor credit risk over duration for several reasons.
Week of October 10, 2016: HCM Market Insights There has been much discussion recently about the extended length of the current economic and market cycles, the slow growth we have experienced during these cycles and if we are coming to an end which would lead to recession and poor market returns. HCM does not believe we are at the end of the market cycle yet.
Week of October 3, 2016: HCM Market Insights September had its share of volatile days, but in the end stocks gained ground for both the month and the quarter with both U.S. and foreign stocks on the positive side of the ledger. HCM believes that the decline which occurred early in September will prove to be a pause that refreshes rather than the beginning of something bigger. Foreign stocks outperformed U.S. stocks for both the month and quarter giving a modest performance edge to globally diversified portfolios.
Week of September 26, 2016: HCM Market Insights The last few weeks have seen a renewed dose of market volatility. However, for all the sound and fury, not very much has transpired. HCM’s view is that we will see more volatility as we move into the last weeks of the election and the third quarter closes out with corporate earnings announcements.
Week of September 19, 2016: HCM Market Insights Economic data released last week will factor into this week’s Federal Open Market Committee (FOMC) decision on whether to push interest rates higher in the United States. Some of the August data supports the idea economic growth was soft. For example, August retail sales fell more than expected, down 0.3 percent from July. Other data was as expected: U.S. producer prices were flat, which was in line with expectations.
Week of September 12, 2016: HCM Market Insights Equity indexes made gains early last week as lackluster economic reports in the labor and manufacturing sectors, coupled with a falling dollar, appeared to be fueling speculation that the Fed won't be raising interest rates following its meeting later this month. However, by the close of the week, stocks and bonds changed direction and posted their largest losses since the Brexit vote in June, as traders pulled an about-face. Also, P&G notice of Coty Exchange Offer.
Week of August 29, 2016: HCM Market Insights Markets traded in a narrow range most of last week waiting for Janet Yellen’s comments following the Federal Reserve summit in Jackson Hole Wyoming. There are two key questions that investors want the Fed to answer.
- When will the next interest rate move take place?
- Where is the tipping point (known as the neutral rate) where future interest rate increases will start to hurt the economy?
Week of August 22, 2016: HCM Market Insights Activity in The HCM Advance and Defend™ Portfolios last week focused on increasing yield, and maintaining our credit bias and our modest overweighting to a diversified equity allocation. This involved a reallocation of funds via a reduction in our duration sensitive fixed income holdings as well as residual cash from a recent trade. These assets were invested into a Strategic Income Fund (JSOAX) that will complement our holdings in Blackrock.
Week of August 15, 2016: HCM Market Insights Last week, HCM completed our most recent reallocation in HCM Advance and Defend™ Portfolios to gradually reduce our exposure to defensive securities and increase our exposure to more cyclical and growth oriented securities. We have received a number of questions about why we maintain modestly overweight equity allocations when we believe stocks are overpriced on a long-term basis. The explanation lies in the difference between relative and absolute value.
Week of August 8, 2016: HCM Market Insights Last week saw two big market moving news items as well as a continuation of earnings season. On Thursday the Bank of England announced a post Brexit stimulus program that will likely have the effect of supporting global asset prices. On Friday the U.S. payroll report, arguably the most important economic release of the month, reported 255,000 new non-farm jobs were created in July, beating expectations. This market friendly news suggests that moderate growth will likely continue in the U.S.
Week of August 1, 2016: HCM Market Insights The Party is Over – Let the Games Begin! No, we don’t mean the Olympics, we mean the U.S. election. What does history tell us about political outcomes and market trends?
Week of July 25, 2016: HCM Market Insights In a week filled with political distractions that could have spooked the markets, last week stocks moved slightly higher. During the week, HCM completed a trade to reallocate a portion of our large-cap equity exposure to a small cap dividend strategy.We still expect growth to improve modestly in the second half of 2016. We have a positive outlook for the balance of the year and remain overweight stocks at this time.
Week of July 18, 2016: HCM Market Insights Crowd psychology and human nature have not changed much through the years. When, for whatever reason, the crowd gets extremely excited about something, they tend to get fully invested driving prices up. Then, just as spring follows winter, the style changes and prices fall. The same thing happens in reverse when the crowd gets extremely bearish. This notion of fashion leaders and laggards brings us to our most recent allocation change which will take place in both HCM Advance and Defend™ and HCM Strategic portfolios.
Week of July 11, 2016: HCM Market Insights Following the BREXIT vote that saw stocks plunge and then immediately begin a recovery process at the end of June, the markets began to settle back into a more normal pattern last week. While investors expect volatility from their stock holdings, they generally look to bonds as a life preserver to help them stay afloat when the stock market is sinking. Today we want to focus on the risk now embedded in bonds and how HCM is handling that risk.
Week of June 27, 2016: HCM Market Insights Last week was all Europe, all the time. The Brexit vote resulted in a decision for the United Kingdom to leave the European Union. While the decision was a surprise, the immediate emotional market reaction was not. Markets sold off on Friday morning and the selling continued into this morning’s trading.
Week of June 20, 2016: HCM Market Insights HCM was invited to join 150 of the nation’s top Independent Registered Investment Advisory firms at the Explore Conference last week. Some of the nation’s top economic and political leaders, including Condoleezza Rice, Frank Luntz, Liz Ann Sonders and Jeffrey Kleintop, discussed the key forces driving the world’s financial markets. Unfortunately, the markets misbehaved.
Week of June 13, 2016: HCM Market Insights Why the lack of confidence despite the market’s advance? The caution represents potential for positive responses if BREXIT is voted down, election polls begin to show a trend, Zika fears fade ahead of Brazil's Olympics, and weak economic reports prove to be exceptions rather than part of a broadening trend.
Week of June 6, 2016: HCM Market Insights Last week’s most anticipated piece of economic news involved May’s employment report released on Friday. The impact from the jobs report was to create confusion as the rather large “miss” creates some renewed doubt about continuing economic growth.