Gill Capital Partners July 2017 Commentary
“If all the economists were laid end to end, they would not reach a conclusion.” – George Bernard Shaw
Q2 2017 Market Review
As we look back at the second quarter and the first half of the year, we see strong returns across most asset classes. This performance is somewhat intriguing given the toxic political climate here in the U.S. and the various geo-political headlines (Brexit, North Korea, etc.) that could easily have created headwinds. Emerging market and international equities led the gains for the quarter and year to date. The gains in international and emerging market equites are a welcome change to asset allocators, as these asset classes have lagged U.S. equities for several years. Asset allocation and active management have continued to work in the second quarter, as properly diversified portfolios have rewarded investors. U.S. equities were up between 2.5% and 4% for the quarter and are up between 5%-9% for the year. Bonds also saw a positive return for the quarter, with the Barclays Aggregate Bond Index returning 1.45% as rates fell. Commodities generally lagged the market in the second quarter and for the year, and oil particularly has declined in the face of ongoing supply concerns.
Q2 2017 Economic Review
Many of the economic data points were weaker than anticipated in the second quarter.
GDP – First quarter GDP came in at 1.2%, much lower than anticipated. This was led largely by a drop in consumer spending.
Employment – The Bureau of Labor Statistics reported job gains of 222,000 in the month of June following a series of weaker reports early this year. The 6-month moving average now sits at 180,000 jobs being added per month with an unemployment rate of 4.4%
Inflation – Inflation measures have come in below expectations in recent months, and prices declined broadly in May. Year over year inflation numbers have continued to drift lower and are below the Fed’s target of 2%
Recent data continues to point to a mixed bag for the second half of the year, with strong corporate profits and manufacturing beginning to show signs of life, but retail sales and sluggish wage growth continuing to mute overall economic growth.
Save The Date – Lunch and investment discussion with Jeffrey Kleintop
Please join us for lunch at the Denver Country Club on Wednesday September 13th for a compelling presentation by Jeffrey Kleintop. Jeffrey is the Chief Global Investment Strategist for Charles Schwab, and is responsible for the research, commentary and actionable insights that help individual investors and their advisors understand the significance and financial implications of events and trends worldwide. Kleintop is frequently cited in both national and international media outlets including the Wall Street Journal, the New York Times, Barron’s and the Financial Times. He also appears regularly on news networks like CNBC and Bloomberg TV to share his thoughts on the global investment climate. Recognized by the Wall Street Journal as one of “Wall Street’s Best and Brightest,” he is also the author of the book Market Evolution: How to Profit in Today’s Changing Financial Markets. Prior to joining Charles Schwab, he served as the Chief Market Strategist at LPL Financial.
We hope you will be able to join us for this unique event. A formal invitation will be forthcoming.
Please let us know if you have any questions or concerns about this report, or if there have been any changes in your financial circumstances including education, taxes, insurance or estate needs.