News & Insights
Dangerous Complacency or Goldilocks, Again?
YorkBridge Investment Committee
With the S&P 500 up 9+% through June 30 and half way through the ninth year of a bull market, should we stay fully invested in equities or start to look elsewhere?
With strong fundamentals in place, the markets should continue to rise and valuations expand: steady economic growth, low unemployment, higher real wages, high consumer confidence and rising consumption all bode well. Earnings and economic growth ultimately determine the direction of markets more than whatever may happen with the controversial Trump administration, while markets have lost enthusiasm for any immediate stimulus from Washington given ongoing political chaos and uncertainties.
With unemployment at 4.3%, wage inflation would typically be kicking into high gear by now, and the Fed would be planning to raise rates in anticipation of cooling off an overheating economy. But except for a few wispy tendrils of inflation a few months back, it looks like continued technological innovation and automation, attenuated union power, and global competitive forces are keeping it in check…for now.
While the Fed is committed to raising rates and did so this past quarter, those increases look to be gradual enough to allow a moderate but healthy economic expansion to continue with recession risk low: a few more years of solid earnings growth for US corporations looks quite doable. For bonds, the bull market is over, but it is not a bear market either, as interest rates look likely to climb with stability-enhancing incrementalism.
With much of Trump’s pro-growth agenda – infrastructure spend, tax cuts, deregulation – in jeopardy for reasons published daily, the markets seem to have already discounted that, as evidenced by the disappearance of the so-called Trump trade year-to-date – yet the market has moved higher on the breadth and health of US corporate earnings and the world-wide recovery in the major economies of Japan, China and Europe. Any legislative victories for his policies will provide additional fuel for the market, though removal of the threat of more regulations and higher taxes is already providing an unseen but powerful underpinning for equity valuations.
As experienced and seasoned stewards of your capital, we remain committed to the principals of diversification and wise asset allocation, be it in equities, bonds, real estate or other, while choosing best-in-class managers and securities to achieve your goals.
The Information contained in this document is based on data received from third parties which we believe to be reliable and accurate. YorkBridge Wealth Partners, LLC has not independently verified the information and does not otherwise give any warranty as to the truth, accuracy, or completeness of such third party data, and it should not be relied upon as such. Any opinions expressed herein are our current opinions only. YorkBridge Wealth Partners, LLC is an SEC Registered Investment Adviser under the Investment Advisers Act of 1940 (“Advisers Act”). Registration of an investment advisor does not imply any specific level of skill or training. The information contained in this document is to assist with general planning. Please consult with your own tax advisor and attorney for more specific information.