Solving the “Riddle of Risk” by Better Understanding Your Financial DNA
Weekly Commentary, February 24th, 2017
- Equity markets were mixed for the week with the S&P 500 up 0.70% while the EAFE ended up down 0.17% after a weak Friday.
- Fixed income markets were both positive this week with high-quality bonds (AGG) up 0.59% and high-yield bonds (JNK) up 0.51%.
- Fed Minutes Released – details from their last meeting showed that many members feel the time to raise rates is “fairly soon,” but it is noteworthy that the three most influential members (Yellen, Dudley and Fischer) are expressing more caution. Notably, there was no discussion of shrinking the Fed’s balance sheet of Treasury purchases.
- Earnings Season – as the season ends earnings growth is coming in at 7.5% for the quarter, and importantly top-line revenue also grew at approximately 5% according to Thomson Reuters, making it the best earning season in two years. This occurred despite downward revisions by many analysts heading into the quarter. As we explained in a WC last year, negative sentiment heading into earnings season usually leads to better market returns as it did again this quarter.
- Greece's Debt Situation – European markets, particularly bond markets, rallied on the news that Germany’s Angela Merkel and the IMF’s Lagarde may be close to a new bailout deal for the troubled country.
- Treasury Secretary Mnuchin – in comments this week seemingly backtracked a bit on the anti-trade border tax proposal, said his focus will be on middle-class rather than high-income tax cuts, and expressed a good relationship with Fed Chair Yellen.
- Commentary: Taking the time to understand your emotional drivers around money, your long-term and short-term risk profiles and how exactly your portfolio addresses each of those is critical to your investing success. Doing so requires distinct conversations and tools, brought to bear by a professional that understands the nuances of each of them and cares deeply about helping you not just reach your goals but doing so in the manner that best suits you.
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