2019 1st Quarter Commentary

Overview “We have met the enemy, and he is us.” Walt Kelly The dramatic market volatility at the end of last year applied pressure to the Federal Reserve and the Fed subsequently “re-evaluated” its restrictive monetary policy stance. When officials met in mid-December amid market turmoil, a few members of the committee were signaling up to 3 rate increases in 2019. The market, however, was loudly protesting such a policy considering signs of a global economic slowdown and muted inflation. The Fed subsequently reversed course and the stock market … more >

2019 1st Quarter Commentary2019-04-12T13:20:10-04:00

Best state for a private trust? April 2019

South Dakota vs. Delaware Situs – Which is Better? The topic of South Dakota as a favorable trust situs often leads to a discussion comparing the virtues of South Dakota versus Delaware. Which jurisdiction is better? Why South Dakota? Since abolishing the rule against perpetuities in 1983, South Dakota has worked diligently to become the most trust-friendly situs in the nation. The following table compares South Dakota and Delaware with several of the most important situs considerations. This table is not intended to be a legal guide or definitive … more >

Best state for a private trust? April 20192019-04-09T15:11:48-04:00

2018 4th Quarter Commentary

Unlike the first three quarters of the year, market results during the fourth quarter were substantially negative for stocks and positive for bonds. The trade conflict with China and the Federal Reserve’s persistent effort to follow through on “normalizing” monetary policy led to a significant pullback in the stock market and a corresponding rally in high quality bonds. We will expound below, but resolution to one or both issues will be necessary for stock markets to stabilize in 2019. If no resolution is reached, economic activity will likely slow … more >

2018 4th Quarter Commentary2019-03-07T15:01:27-04:00

2018 3rd Quarter Commentary

At first glance, market results during the third quarter pleasantly surprised us but given the strong economic data, the moves appear justified. That said, our 2018 expectations for equity returns have been exceeded and we still have three months to go. Bonds, while slightly negative for the year, have held up well considering the path of the Federal Funds rate. Interest rates have moved higher and appear to continue that trajectory. Of course, concerns persist on many levels which we will discuss below. Economy In our last letter we … more >

2018 3rd Quarter Commentary2019-03-04T15:17:16-04:00

2018 2nd Quarter Commentary

While the first quarter of 2018 reintroduced volatility into the markets, the second quarter seemed to offer a glimpse of stability. Riskier assets in general saw strong returns while the more conservative fixed income markets were flat/slightly negative. The U.S. economic picture remains robust with historically low unemployment and growth projections in the 3% range for the year. These strong dynamics have yielded elevated consumer confidence and support optimistic expectations that the good economic news will continue. Corporate balance sheets are strong, capital expenditures are rising, and earnings are … more >

2018 2nd Quarter Commentary2019-03-04T14:40:47-04:00

2018 1st Quarter Commentary

For the first few weeks of 2018, equity markets echoed the same trend we saw in 2017: steadily marching higher in the face of both good and bad economic/political news. Beginning in early February, markets began to behave differently with dramatically higher volatility. There have been many reasons discussed by financial pundits for why this change occurred, with the most likely culprits being the Fed’s tightening monetary policy (to contain inflation), Washington trade policy negotiations via tariffs and the leadership of large cap Technology companies potentially coming to an … more >

2018 1st Quarter Commentary2019-03-04T14:48:55-04:00

2017 4th Quarter Commentary

As we close the door on 2017, we look back a bit surprised at the magnitude of the rise in global markets. Riskier assets appreciated almost across the board - perhaps no greater example of 2017 “animal spirits” is the headline grabbing emergence of cryptocurrency trading. For stocks, favorable earnings and low interest rates drove valuations higher and led to record highs for most indices. Bond markets struggled to find equilibrium while grappling with Fed rate increases and the magnitude/direction of inflation. As we head into 2018 it appears … more >

2017 4th Quarter Commentary2019-03-04T14:20:10-04:00

2017 3rd Quarter Commentary

The third quarter was (again) characterized by the lowest stock market volatility in decades, coupled with an increasingly volatile bond market. Corporate earnings in the second quarter increased approximately 10% year-over-year, which reinforced the narrative that the economy continues its slow but improving growth trajectory. As expected, The Federal Reserve has laid out a plan to continue tightening monetary policy with both rate increases and balance sheet “normalization.” The net result is a stock market setting all-time highs, a bond market searching for direction, and a continued guessing game … more >

2017 3rd Quarter Commentary2019-03-04T14:19:03-04:00

2017 2nd Quarter Commentary

For the second quarter in a row, both stock and bond prices have risen simultaneously. Equity markets are signaling improving economic growth while fixed income markets apparently fear the opposite. The Federal Reserve held a steady course when it raised rates for a second time this year. On a political front, the situation remains fixed as Congress continues to work on a healthcare bill and tax reform. Corporate revenue and earnings growth were positive last quarter and stock multiples continue to expand while GDP growth expectations fell. Broadly speaking, … more >

2017 2nd Quarter Commentary2019-03-04T11:31:36-04:00

2017 1st Quarter Commentary

Overview The first quarter reflected the continued optimism that began last November with stocks showing solid gains and bonds stabilizing. There has been a surprising lack of volatility in stocks, as can be seen with the VIX index (which measures the volatility of the S&P500) trending at all time low levels. This indicates the positive view on stocks, and therefore the economy, that investors now seem to embrace. The Federal Reserve raised rates in March and signaled more rate hikes to come in 2017. This is yet another confirmation … more >

2017 1st Quarter Commentary2019-03-04T10:29:55-04:00