In the first month of the year, political headlines dominated as Trump began signing executive orders, and the Dow crossed the 20,000 mark for the first time. For the month of January, the S&P 500 Index returned 1.9% while the FTSE All Word Ex-Us Index returned 3.4%.
Since his inauguration, President Trump signed executive orders and took positions on immigration, taxes, healthcare and international trade. Though it is unclear what the outcome of the proposed changes will be, we believe that the changes could impact the investment environment. In this partisan atmosphere where individuals are deeply divided, it is important for investors to remain objective and interpret policies without political opinions.
The latest U.S. economic data has been solid, revealing slow but stable growth of the U.S. economy. According to the latest jobs report from the U.S. Bureau of Labor Statistics, total non-farm payrolls increased by 227,000 in January, and the unemployment rate was little changed at 4.8%. In addition, we’ve had the lowest number of unemployment claims on a rolling 4-week average since 1973. Real gross domestic product (GDP) increased at an annual rate of 1.9% in the fourth quarter of 2016, according to the advance estimate released by the Bureau of Economic Analysis. The ISM manufacturing index rose to a two-year high in January, which is consistent with GDP growth accelerating to around 3% annualized in the first quarter of 2017. U.S. consumer confidence and sentiment is also positive.
The Federal Reserve meeting last week suggested that the Fed will remain in wait and see mode until it gets more clarity on the size and timing of the fiscal stimulus from the Trump administration. Until inflation hits its 2% target, the Fed probably won’t raise rates, though we do believe there will be a few more hikes in 2017.
Though it is hard to look past the headlines at home, manufacturing is strong globally. In Europe, unemployment is down to 9.6%, the lowest rate since May 2009, and the economy is growing at the same pace as the U.S. economy. In China and Japan, problems with unsustainable debt continue. In the emerging markets, we see value for long term investors.
We continue to believe that a long-term perspective and a diversified portfolio will benefit investors. If you are a client and would like further detail on these topics or anything else, please don’t hesitate to call or email us. If you are not a client, but would like more information on Callan Capital’s wealth management services, please contact us at (858) 551-3800 or visit www.callancapital.com.
Past performance does not guarantee future results, which may vary. This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. For more information regarding Callan Capital, please refer to our most recent Form ADV Part 2A which may be found at adviserinfo.sec.gov.
S&P 500®: Standard & Poor’s (S&P) 500® Index. The S&P 500® Index is an unmanaged, capitalization – weighted index designed to measure the performance of the broad US economy through changes in the aggregate market value of 500 stocks representing all major industries.
The FTSE All-World ex US Index comprises Large and Midcap stocks providing coverage of Developed and Emerging Markets excluding the US. The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98% of the world’s investable market capitalization.