Global Investment Outlook and Strategy
December 8, 2017
Improving global economic conditions and an increased likelihood that Congress will implement tax reform legislation underpinned strong gains in U.S. equities in November. Total returns were remarkably consistent across the market capitalization and value-growth spectrums, with tax cut beneficiaries generally outperforming the overall market. In terms of investment themes, high tax rate, share buybacks, domestic sales, and dividend growth all performed well for the month. Although the tight labor market could limit GDP growth near term, it will likely further stimulate wage growth and corporate expenditures on productivity-enhancing capital equipment. With its aim to spur domestic investment, tax reform could ultimately kick-start a virtuous cycle of stronger growth. However, the outlook is not without some noteworthy risks: the Congressional tax plan’s fate, structure, and corporate response remain uncertain, global central banks have become hawkish, China’s economic growth will likely slow modestly, geopolitical risks are elevated, and global debt levels remain excessive. We remain generally constructive on U.S. equities heading into 2018 given the supportive global macroeconomic backdrop and outlook for improved corporate earnings. Closed-end bond funds are currently trading at attractive prices with discounts at wider than average levels and yields over two times the benchmark’s yield on average. In the near term, temporary price weakness from tax-loss selling will create opportunities to add value while the combination of our strong income advantage and defensive yield curve positioning should result in positive relative performance over the intermediate term. In addition, increased geopolitical risks, speculation on the impact from a reduction in the Federal Reserve’s balance sheet, and potential for tax reform are likely to result in overreactions by retail investors, thus creating trading opportunities for longer term investors.
For more details, including a longer discussion on dividend-paying stocks, please see Sit Investment Associates’ October 2017 Global Investment Outlook and Strategy paper. Click here: Global Outlook and Strategy (Adobe Acrobat) or e-mail us at: firstname.lastname@example.org.
MMAF Has Awarded Over 16,500 Grants
Since its inception in 2005, Minnesotan’s Military Appreciation Fund (MMAF) has awarded over 16,500 grants totaling over $10.5 million to Minnesota military personnel and their families. MMAF is a non-partisan, non-political 501(c)(3) non-profit corporation. It is a statewide fundraising initiative by the citizens of Minnesota. Its mission is to say “thanks” to Minnesota service members and their families by providing cash grants to those who are making sacrifices in the defense of our freedoms in combat zones around the world.
The tragedy of 9/11 compelled the late Eugene C. Sit, founder of Sit Investment Associates Inc., to create MMAF in order to thank and give back to Minnesota service members. Sit Investment Associates Inc. continues to support the efforts of MMAF.
To donate and learn more about Minnesotans’ Military Appreciation Fund, please visit the website at www.thankmntroops.org.