Opening Statement from the July 2018 Dividend Gems
Originally published on July 15, 2018
Overview
Despite continued signs of strength in the economy and the trend of strong earnings growth, investors remain primarily focused on the uncertainty surrounding Trump’s approach to restructuring global trade deals. In particular emerging markets have been hit hard, with Southeast Asia and Latin America having received a great deal of the adverse impact of trade uncertainty...
Market Pulse
As a result of the uncertainties regarding US trade policy, the DJIA is only up for the year by a modest 0.8%. In contrast, the S&P 500 has been able to post respectable gains of 3.9% due to exceptional outperformance of select tech giants. In particular a small handful of tech stocks have accounted for nearly all of the gains in the S&P 500 year-to-date...
By contrast, the Nasdaq continues to benefit from investor apprehension due to trade uncertainty, hitting new record-highs. As a result, the Nasdaq has posted a whopping year-to-date return of 11.7%, as investors pile into stocks thought to be less vulnerable to trade issues...
Earnings
Given the lackluster performance of the DJIA and S&P 500 since trade talks began in March, one might assume earnings estimates have taken some hits due to trade uncertainty...
Interest Rates
Given the high chance of a boost in short-term interest rates (really the Fed funds rate) by an additional 50 basis points for 2018, as well as a series of rate hikes totaling 75 basis points in 2019, we are likely to head into 2020 with short-term rates slightly above... However, we believe rates are not likely to exceed...
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