In the December issue of our monthly flagship publication, we feature:

  • On the Record by Chief Investment Officer Tony Roth, Canaries in the economic coal mine.
  • In Focus provides a look at the likely path of tax reform legislation and the potential market and economic impact of its passage.
  • Investment positioning, major themes, and asset class positioning updates. 

The post-recession bull market for U.S. equities has been characterized by muted economic growth, unconventional monetary policy, and few rewarding investment options aside from jumping on the equity bandwagon. In our countless meetings and conversations with individual and institutional investors over the years, we’ve gotten a clear sense of apprehension every step of the way, making this one of the more unloved bull markets in recent memory.

As such, it feels like clients have been warily looking over their shoulders, expecting the next bear market to sneak up at any moment. We witnessed renewed trepidation this month, as two indicators typically seen as canaries in the coal mine for weak equity markets—credit spreads and the slope of the yield curve—came into focus. Yet, with the exception of a wobble from U.S. stocks mid-month, equities continue to climb this wall of worry. Are investors being complacent and ignoring important signs of an impending recession, or are these indicators merely signs of a normal mid-to-late stage economic cycle? We believe market and economic data point to the latter, and we will continue to closely monitor for signs of escalation.

Please see important disclosures at the end of the article. 

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