Global Investment Outlook and Strategy
December 10, 2018
Following October’s decidedly negative performance, U.S. equities generated solid returns in November. However, markets remain volatile as investors fret about the moderating pace of global economic growth, lingering U.S.-China trade policy uncertainty, and tightening financial conditions. Possible inversion of the U.S. Treasury yield curve (i.e., yields on short-dated Treasuries exceeding those on long-dated Treasuries), a phenomenon that has historically preceded recession, has received much press attention lately and added to cautious investor sentiment. Inversion tends to occur when GDP is at or above potential and the Federal Reserve is hiking the fed funds rate aggressively to prevent the economy from overheating and forestall runaway inflation. Leading economic indicators remain favorable and do not imply a U.S. recession is imminent in the next 18 months, barring external shocks. However, economic growth will continue to moderate somewhat into 2019 as the direct impacts of fiscal stimulus fade, financial conditions tighten, inflationary pressures mount, and trade policy uncertainties fester. The ability of investors to accurately predict and time recessions is mixed, at best. Moreover, past market cycles confirm robust equity returns are often achieved in the quarters preceding a bear market/recession. Nonetheless, market downturns have a certain self-fulfilling element given the impact on confidence and the wealth effect. Based on evolving policy and economic uncertainty, combined with several potential upside/downside catalysts, we continue to believe a “barbell” investment approach provides a balanced risk-reward profile for domestic equity portfolios. We have trimmed some deeper cyclical exposure, predominately within the energy sector, and favor insurance and healthcare stocks for defensive exposure over more expensively-valued bond proxies.
For more details, including a longer discussion of high growth stocks, please see Sit Investment Associates’ October 2018 Global Investment Outlook and Strategy paper. Click here: Global Outlook and Strategy (Adobe Acrobat) or e-mail us at: email@example.com.
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.