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Market Insights

Week of September 8, 2017: HCM Market Insights Debt Ceiling "Can" Kicked Down the Road:

It was Hurricane Harvey that spurred politicians into action last week. The debt ceiling and funding plan was packaged with provisions that provide hurricane relief to those suffering from the storm’s devastation. This came just as Florida was bracing for the impact of Hurricane Irma. A government shutdown, the likely outcome of failure to pass a 2018 budget, would have been a serious problem at a time when states are looking to the federal government for much-needed support. And, while Washington averted an imminent fiscal crisis...

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Week of August 25, 2017: HCM Market Insights Short Term Danger, Long Term Opportunity:

HCM believes that any number of events over the next few weeks could throw the market for a loop. First, Congress needs to agree on a budget for fiscal year 2018. This exercise could produce a display of legislative brinkmanship as the debt impasse coincides with the deadline to pass a new government spending bill. Second, the Federal Reserve is about to embark on an unprecedented winding down of its crisis-era balance sheet. This takes place as the European Central Bank is preparing to scale back its economic stimulus. One could add to this list any number of issues ranging from U.S.-North Korea tensions to political infighting regarding tax reform.

While political and policy uncertainty may stoke market volatility...

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Week of August 11, 2017: HCM Market Insights HCM Second Half Outlook: Stocks have recently welcomed good earnings announcements with indifference while investor sentiment seems to be showing signs of fatigue.  That said, in spite of excessive valuations in the U.S. and parts of Europe, the global economy has settled into a steady growth phase where HCM sees reasonably strong global fundamentals leading to positive equity returns in the second half of 2017.  As a result...

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Week of July 21, 2017: HCM Market Insights Building on A Foreign Foundation: Earlier this year HCM increased our exposure to non-U.S. equities based on...

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Week of July 7, 2017: HCM Market Insights Rethinking Risks and Returns: The world economy is making steady progress...

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Week of June 19, 2017: HCM Market Insights Why Won't Interest Rates Go Up? The Federal Reserve raised interest rates as expected last week but

long-term yields fell, mostly in response to weak U.S. inflation. In spite of this disconnect...

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Week of June 5, 2017: HCM Market Insights Better Returns with a Different Kind of Diversification. For decades, investors have described portfolio diversification in terms of sectors such as financial stocks, industrial stocks, technology stocks, etc.  While that is still a valid way to think ...

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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.

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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.

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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.  

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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.

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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.

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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.  

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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.

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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.

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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.

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