Investment Management

Read what we are discussing this week:


• The Federal Reserve took a pass on raising interest rates this week. Although the Fed did signal that one more increase is likely by the end of the year.
• The Fed did however say that it would start shrinking its portfolio of bonds next month, which stands at $4.5 trillion, a move that has been well-telegraphed and expected by the market.
• Following the financial crisis, the Fed began purchasing bonds to help stimulate the economy.
• On the day of this announcement, Wednesday, the Dow Jones Industrial Average gained 42 points. The fact that the market seems to be taking this in stride is a testament to the underlying improvement in the economy and that shrinking of the balance sheet will occur slowly.
• Oil is back through $50 per barrel. The beleaguered energy sector—the worst performing sector in the S&P 500 so far this year—had a nice bounce last week rising 3.5%.
• Sentiment regarding energy stocks has been quite negative but could be at a turning point.
• Emerging markets continue to perform well, now up about 30% so far this year. The case for sustained growth in emerging market economies is strong. Cyclical patterns may look different in the future due to the growing middle class and rising consumption.
• The emerging market middle class is growing at its fastest pace ever—1.6 billion people or 23% of the world’s population will enter the middle class between 2015 and 2025.
• Their spending is estimated to add an additional $17.5 trillion of consumption by 2025.
• Think electric vehicles are a fad? The build out is well underway, and the trend will likely accelerate from west to east.

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