As I mentioned in this morning’s meeting, attached is the updated Guide to the Markets from JP Morgan. I have included some of the most timely and relevant charts below.
S&P Valuations have become more “normalized” but CAPE P/E still 1 S.D. above historical average
Earnings growth continues to improve in the U.S.
Over the past year, growth has outperformed value; this has turned slightly in recent weeks
Valuations have come down as earnings expectations grow and prices fall
As we expected, volatility increased already in 2018; some choppiness is normal over time
Individual net worth continues to increase, indicating a strong consumer
Unemployment rates continue to fall and we have seen a slight pickup in wage growth
CPI has increased (higher inflation) but we are still well below historical averages
Nominal vs. Real Yield; payout from fixed income remains low
Effects of duration: what a 1% rise in interest rates means for different fixed income vehicles
Monetary easing is slowing down in developed markets
We are in a period of synchronized global growth
Global valuations are at more “normal” levels; Developed and EM still slightly “cheaper” than U.S.
Hedge Funds – interesting that simple “large cap” hedge funds have had the best returns over time
Annualized return assumptions have decreased substantially over the past 20 years
Peter Malone, CFA
Research Analyst
Direct: 617.226.0030
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109
PLEASE NOTE!
We moved! Please note our new location above!