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December 31, 2017 |

The past twelve months were historic for the S&P 500 Index, marking the first calendar year since 1926 when every month experienced a positive total return. In fact, there has not been a negative monthly total return since October 2016. The Federal Reserve increased short-term rates at their December meeting (the range for the Fed Funds rate is now between 1.25% - 1.5%), a move highly anticipated by investors. This marks the fifth increase in the past two years. At the same meeting, Fed officials also increased their GDP expectations for the coming years. President Trump signed off on the Tax Cuts and Jobs Act, passing the tax reform promised during his presidential campaign. Two key changes from a corporate standpoint are lower tax rates for corporations (from 35% to 21%) and a one-time tax on the repatriation of overseas earnings. Lawmakers are hopeful the reform will provide a boost to investment spending and increase wages for workers. The reform should provide a modest tailwind to corporate profits. International equities had strong returns in 2017 as well with U.S. investors benefitting from a weakening dollar. The rebounding global economy is expected to continue to strengthen into 2018 with synchronized growth across all regions. International and Emerging Market equities remain more attractively valued compared to their U.S. counterparts.

October 9, 2017 |

Entering October, the S&P500 Index is at all-time highs.  The Fed has announced its plans for starting to slowly reduce its $4.5 trillion balance sheet in October and all eyes are now focused on the potential for tax reform.  Markets enjoyed somewhat of a rotation in September as value stocks outperformed growth for just the second month this calendar year, and big tech growth stocks took a little breather. Global markets have continued to shrug off geopolitical events (for the most part), as global growth and more optimism abounds.  It is also worth noting that the recent Catalan secession movement has had only a local effect on Spanish markets. Despite subtle tensions between the U.S. and China, in particular over North Korea, the Chinese market continues to show signs of growth. Emerging Market equities suffered their first monthly loss of the year in September with a 40bps pull-back, but are still up nearly 28% year-to-date.  Investors will pay close attention to any potential ripple effects in the Emerging Markets caused by U.S. Fed rate policy.  Otherwise, EM still remains the most attractively valued of the equity spectrum.