The financial markets delivered positive returns in the first few months of the year, as investors watched Trump’s first 100 days and the Dow crossed 21,000 for the first time. For the month of February, the S&P 500 Index returned 3.97% while the FTSE All World Ex-Us Index increased 1.74%. Year-to-date through February 28th, the S&P 500 delivered 5.94% and the FTSE All World Ex-US was up 5.22%.
President Donald Trump’s speech last week to a joint session of Congress offered little clarity on the tax reforms and additional spending the White House seeks from Congress. With Congress busy with efforts to repeal and replace existing health care legislation, it will most likely take longer to pass tax reform than was generally thought on election night. As we mentioned in previous updates, though it is unclear what the outcome of the proposed changes will be, we believe that the changes could impact the investment environment, thus it is important for investors to try to remain objective and interpret policies without political biases.
The latest U.S. economic data has been solid, revealing slow but stable growth of the U.S. economy. Per 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%. Real gross domestic product (GDP) increased at an annual rate of 1.9% in the fourth quarter of 2016, according to the Bureau of Economic Analysis. The ISM manufacturing index rose from 56.0 to 57.7 in February, which shows that factory activity is picking up, which could also mean GDP growth could accelerate in the first quarter.
The Fed remains in wait and see mode until it gets more clarity on the size and timing of the fiscal stimulus from the Trump administration. However, Janet Yellen announced last week that the Fed may raise rates this month at the next FMOC meeting in mid-March. We believe that there may be a few more hikes in 2017, especially if inflation hits its 2% target.
Globally, equities continued their winning streak in February with low levels of volatility. With Greece in the headlines again and upcoming elections across Europe, it will be interesting to see if the populist vote affects the geopolitical landscape. In the emerging markets, we believe Trump’s anti- trade rhetoric will need to play out, but we do 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.