Economic Outlook

GLOBALIZATION AND THE TRADE WAR

The news flow over the last few weeks has centered on Trumps attempts to level the playing field with America’s adversaries and partners.  This would include China, Mexico, and much of Europe. The game at play involves global trade and Trumps desire to better position America as a major exporter of goods and services to the emerging middle classes in China, India, and Asia.  Investors are always worried about change and this game at play could put America back into a whole new cycle of amazing growth similar to the nifty 50s.  Thus far we have seen more pessimism rather than optimism. As a result the markets have fallen 5 to 7% on this recent news flow. Synthesizing the right decisions out of these developments is our challenge as we try to stay ahead of where investors will go over the next year as they watch Trump do what he does best - negotiate and deal. Read more

Donald Trump Grows Confident On Re-election

Donald Trump surprised the markets and investors last week when he announced decisions to continue to aggressively battle China and seek significant gains in a trade agreement as his reelection year approaches quickly. Most investors believed that Trump was more concerned about the short-term gains for the economy than the long-term potential that would be derived from a trade agreement.  As a result investors likely believed that Trump would back off the aggressive tone he had taken previously toward the Chinese and either sign a compromised agreement or allow this opportunity to pass. This obviously did not happen. Read more

Strong Economic Data Drives Equity Performance Higher

US Stocks have regained their footing as predicted in our first quarter newsletter. We believed equities would get back on track after first-quarter earnings reports and economic data that we expected to be quite positive. This is exactly what happened in the second quarter. The leadership centered on domestic equities with NASDAQ and small cap stocks at the top of the list.  Foreign markets tumbled as expectations for growth in the globe receded given the current environment for trade and impending tariffs. Emerging markets and China suffered the most with Europe closely behind in the freefall.  This downturn came and pushed money into the US markets as the US economy stands strong in the trade war. In anticipation of this MACM exited all of its investments in emerging markets in Europe toward the end of Q1 and repositioned the portfolio in domestic equities leveraged to consumption themes present in America.Read more

Equity Markets Delink From Economic Data And Get Distracted With Washington Policy.

Equity Markets Delink From Economic Data And Get Distracted With Washington Policy. Equity markets in America suffered their worst quarter in over two years as 2018 began on a soft note. The softness in equities in Q1 followed an outstanding year for equities in 2017 and was not surprising for many investors but was unwelcome for traders.  The S&P 500 fell .76% in the first quarter of 2018.  Mitchell Anthony Capital Management (MACM)’s clients enjoyed much better performance in Q1 with almost all strategies posting positive returns.  MACM’s diversified equity portfolio advanced 4.8% , DYNAMIC GROWTH advanced 3.5% HIGHLY FOCUSED EQUITIES advanced 5.4%,  ASSET ALLOCATION INCOME advanced 3%, and GROWTH advanced 4% in the quarter.  MACM’s clients enjoyed 372 - 620 basis points of positive alpha in Q1 of 2018. This outperformance was attributed to the superior group of equity holdings in the portfolios managed by M ACM.   Positive alpha was gained from holdings in healthcare, Internet retailing, technology, and financials. Conversely MACM had only modest holdings in areas like telecom, energy, utilities, and consumer staples (which led the equity market lower).Read more

What a Year!

2017 began with optimism from investors, consumers and businesses.  The market’s great year began with a great first quarter followed steadily by similar gains in Q2 - Q4.    Washington policy took a turn for the better despite unrest amongst the liberal socialists in our country.   Trump’s first year was difficult for him and the nation as the country failed to unite; however, progress was made as Trump proved himself worthy of the job and did get one of his initiatives done! The tax cut was a great victory for business and had some modest benefits for most Americans as well.  The obstruction to Trump's plans was unfortunate.  It continues but shows signs of waning as liberal democrats are losing face, and possibly their will to continue, as meritless attacks failed to distract the White House agenda, but did wear on the American public’s tolerance for dishonesty from their leaders and the media. Read more

Markets & Economy Stay on Track

The American Economy continues to show signs of improvement and the growth picture has improved.  As a result the equity markets have moved significantly in the first half of the fourth quarter.  Economic results showing the health of the consumer, industrial sector, and globe have trended higher throughout Q4. This along with strong corporate earnings announcements since the end of Q3, have provided fuel for higher equity market prices.  While many thought the leadership in the market was due for a change toward value, this has not occurred, and better earnings continue to drive the growth markets higher.Read more

Growth Picture Improves

Despite a flattening in consumer confidence in the US, growth in the American economy improved in the third quarter of 2017. GDP for the second quarter was revised upward from 2.2% to 3.1%. Corporate earnings accelerated in the third quarter for the S&P 500 to over 17%. Consumer confidence which hit a 17 year high in March 2017, has since eased back modestly. The change in trend for consumer confidence is difficult to quantify but it is likely due to politics in Washington and the country’s inability to come together since the election.Read more

Growth Remains a Mixed Picture

The growth in the equity markets has been far greater than the growth in our economy since President Trump was elected. The S&P 500 logged another quarter of growth with the index advancing 3.1% in the quarter and advancing 9.3% year to date. MACM's dynamic growth portfolio also logged another good quarter of growth advancing 4.4% in the quarter and 13.5% year-to-date. This is not unusual as markets seem to perform the best during periods of slow growth with low inflation and friendly monetary policy. While this is true, we must note that the equity market rally paused in 2014 and 2015 when corporate America fell into an earnings recession and slow growth was replaced by no growth.Read more

Trump - Great Medicine for the Economy & Markets

Whether you look at financial market performance, consumer confidence, the purchasing manager survey, or unemployment data, it is clear that Trump has been great medicine for the globe’s economies and financial markets. The election of Donald Trump has brought higher confidence to consumers, investors, and unemployed Americans. The Trump effect has also played out in international economies. The globe is now in full expansion mode according to the latest purchasing manager index readings.Read more

Rising Consumer Confidence Leads Equity Markets Higher

2016 was a volatile year for the global economy and the world’s financial markets. The year began with the markets and the economy drowning in pessimism, but ended with consumer confidence at a 15 year high and the DJIA knocking on the door of 20,000. One might say that investors have blind optimism in pushing the DJIA to all-time highs given the fact that significant obstacles remain in the path of our economy. Mr. Trump is likely a big part of the reason for this optimism. His campaign identified and shouted from the mountaintop the problems that have handcuffed the globe’s economic superpower for the last decade.Read more