Global Investment Outlook and Strategy
November 8, 2017
Larger market capitalization, growth-oriented stocks outperformed in October following strong gains in reflation beneficiaries and smaller capitalization stocks in September, resuming the trend that has held for much of 2017. Year to date, growth indices have outperformed value counterparts meaningfully across the market capitalization spectrum. As for the U.S. economy, third quarter real GDP growth of +3.0 percent exceeded consensus expectations of +2.5 percent. We are currently projecting real GDP growth of +2.5 percent in the fourth quarter of 2017 given buoyant consumer spending and improving business capex trends. The National Retail Federation currently projects that 2017 holiday retail sales will increase +3.6 to +4.0 percent year over year, aided by strong consumer confidence and a longer shopping season. President Trump recently nominated Jerome Powell to serve as the next Chair of the Federal Reserve’s Board of Governors, replacing Janet Yellen when her term as Chair expires in February 2018. We anticipate that the Federal Reserve will generally remain data dependent/market sensitive as it seeks to “normalize” the fed funds rate and its balance sheet concurrently. Unprecedented monetary easing by global central banks in recent years has created a “lift all boats” environment, with all stocks (regardless of quality) benefiting from a liquidity-driven bull market. While remaining constructive on the stock market outlook, we recognize that high valuations make equities vulnerable to external shocks. In this regard, we continue to believe a “barbell” approach is appropriate for client portfolios, emphasizing a combination of pro-growth/Trump policy beneficiaries, such as industrials, financials, semiconductors, and transports on one side. Yields rose modestly in October for both taxable and tax-exempt securities with maturities of ten years and less, while they fell modestly for longer maturity bonds. While longer-term bond yields are also expected to rise, those increases are expected to be more modest than the rise in short-term interest rates.
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: 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.