Despite market volatility in recent months and the resulting dip in investor confidence, the typical investment portfolio is still far more valuable than it was 10 years ago, and the Dow has nearly tripled.1
Read MoreEconomic Commentary: The U.S. Equity Market Outlook and Valuations
Investors can best understand the current equity market sell-off by recognizing that cyclical bull markets are routinely punctuated by temporary intra-cycle corrections. The current sell-off is the sixth such episode since the equity bull market began in 2009, and the intra-cycle decline differs from the previous five in that it was not triggered by fears of imminent recession. In addition, the current episode is occurring in an environment of lofty valuations and greater investor optimism, compared with distinct undervaluation and widespread risk aversion prevailing during previous interim market declines.
Read MoreEconomic Commentary: Inflation Forecast
Most recent inflation data depict that mild inflationary pressures are building, consistent with a maturing business expansion. However, powerful structural forces that limit business pricing power suggest that the cyclical rise in inflation will be moderate compared with previous cycles.
Read MoreEconomic Commentary: What’s In Store for Investors in 2018 and Beyond
The dynamic nature of current economic conditions imply that business and investment cycles will inevitably change, almost certainly in a negative direction. In principle, financial markets are priced at the margin, which means that even small changes in expectations can translate into large changes in asset prices.
Read MoreEconomic Commentary: Indicators Investors Should Monitor To Understand Market Direction
World financial markets are at an important inflection point. The extended period of market calm, complacency and record-low volatility has ended for the current investment cycle. The risk to both equity and bond markets is that economic data are too strong rather than too weak, creating a negative environment for inflation, monetary policy and interest rates.
Read MoreIndustry Update: IRS Limits Adjustments for 2018
The Internal Revenue Service announced its changes to retirement plan contribution and Social Security limits for 20181. These numbers don’t necessarily change annually, so being aware of this year’s tax-adjusted figures could impact how you guide your clients in their financial decisions.
Read MoreEconomic Commentary: 2018 Tax Cuts and Jobs Act
Recently passed and formally enacted on January 1, 2018, the 2018 Tax Cuts and Jobs Act introduces a number of significant changes to the tax code, with about one-third directed to individuals and households, and the remaining two-thirds impacting corporations — notably a tax rate reduction from 35% to 21% and immediate 100% expensing of capital expenditures for equipment and machinery.
In this month’s Economic Commentary, Robert F. DeLucia, CFA and Consulting Economist for MEMBERS Capital Advisors, Inc., shares his perspectives on the potential impact of the changes, the positives and negatives that come along with the tax bill and what it all could mean for investors.
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