Q2 2019 Investment Outlook April 30, 2019 Russ Allen, CIO
Disclosures Important Disclosures: This information is for discussion purposes only and is being furnished on April 30, 2019. This information is not to be re-transmitted in whole or in part without the prior consent of Berman Capital Advisors. While all the information prepared in this presentation is believed to be accurate, Berman Capital Advisors makes no express warranty as to its completeness or accuracy nor can it accept responsibility for errors appearing in the presentation. No information provided herein shall constitute, or be construed as, an offer to sell or a solicitation of an offer to acquire any security, investment product or service, nor shall any such security, product or service be offered or sold in any jurisdiction where such an offer or solicitation is prohibited by law or registration. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product will be profitable or be suitable for your portfolio or individual situation. Please contact Berman Capital Advisors to discuss your individual situation. Berman Capital Advisors / 2
Financial Market Whiplash Total Index Return Q4 2018 Q1 2019 S&P 500 -13.5% 13.6% Russell 1000 Growth -15.9% 16.1% Russell 1000 Value -11.7% 11.9% Russell Small Cap -20.2% 14.6% MSCI EAFE (International) -12.2% 10.1% MSCI Emerging Markets -7.3% 10.0% US Aggregate Bond 1.6% 2.9% High Yield Bonds -4.5% 7.3% Source: Factset Research; data through 3/31/2019 Note: Int'l market returns reported in U.S. Dollars, not local currency Berman Capital Advisors / 3
Economic Outlook • U.S. Growth likely to return to the roughly 2% pace seen from 2010-2016. • Without a boom, it’s harder to have a bust. • Policy environment is supportive: ✓ Interest rate hikes cycle over? ✓ Consumers and businesses financially healthy Inflationary pressures well contained, despite low ✓ unemployment Global central bank policy has turned easier ✓ Berman Capital Advisors / 4
Inverted Yield Curve Fed Controls Short End. Market Thinks too Tight. Long end actually steeper Most Inverted in Middle (3-5) Source: Factset Research
U.S. Real GDP Growth Source: Ned Davis Research Berman Capital Advisors / 6
Global Growth Slowdown Berman Capital Advisors / 7
Current Economic Activity Berman Capital Advisors / 8
Global Shipping Index Rebound Berman Capital Advisors / 9
Earnings Outlook Berman Capital Advisors / 10
Earnings Outlook (Cont.) Source: Ned Davis Research Berman Capital Advisors / 11
S&P 500 Valuation Berman Capital Advisors / 12
U.S. vs International Stocks Berman Capital Advisors / 13
Global Stock Market Valuation MSCI Region Forward P/E Emerging Europe 6.5 Emerging Markets 11.9 Emerging Latin America 12.0 Emerging Asia 12.5 Pacific ex. Japan 12.8 Europe 13.3 World ex. U.S. 13.3 Europe ex. U.K. 13.7 USA 16.7 Source: Ned Davis Research Berman Capital Advisors / 14
U.S. Dollar Outlook Berman Capital Advisors / 15
Private Equity Mega-Funds Berman Capital Advisors / 16
Conclusion The investing environment today looks familiar: slow but positive • growth, little inflation and policymakers afraid of spooking financial markets. Don’t fear the yield curve. • This scenario implies investors should overweight global equities, underweight high quality bonds, and maintain a neutral allocation to cash. • We think no new rate hikes mean the US dollar may weaken, boosting international currencies and investment returns in a relative sense. Many international markets are cheap. • The most significant risk is still economic weakness, especially in the developed world outside the U.S. We think emerging market fundamentals are better than generally appreciated. Berman Capital Advisors / 17
Thank You
Recommend
More recommend
