Market Watch 2018 Q2 - Mosaic’s Quarterly Market Commentary

Kevin Gahagan / Jul 24, 2018 / Market Commentary

The markets have been noticeably more volatile in recent months as the economic recovery approaches its limits. Between trade wars with China, continued uncertainty on the Korean Peninsula and with Russia, and a tightened monetary policy by the United States Federal Reserve—recently joined by the European Central Bank—we are seeing the beginning of a slowdown to one of the longest economic recoveries in history. 

The new issue of Market Watch is out now. 

More insights are inside the issue, including a breakdown of current economic factors influencing the markets.

 
Click here for the full issue.
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Market Watch 2018 Q1 - Mosaic’s Quarterly Market Commentary

Kevin Gahagan / Apr 17, 2018 / Investments / Market Commentary

This is a tale of two market environments.

As clients can see in their quarterly reports, the one-year numbers show strongly positive returns with very few exceptions.

In contrast, the first quarter of 2018 was a different story. First quarter numbers were negative in a majority of investment asset classes.

It remains to be seen whether this represents the beginning cracks in the long growth run we’ve enjoyed since the end of the great recession in early 2009.

After experiencing relatively calm markets in 2017, volatility returned in the first quarter of 2018. Bond prices fell as interest rates rose, while US and international stocks declined. With tensions heating up between the US and leading communist countries (including potential trade wars with China, nuclear tension on the Korean Peninsula, and the expulsion of Russian diplomats), there is a great deal of uncertainty on the global stage, which all contributed to a weak first quarter.

The outcomes weren’t terrible, but all of this is a change from the positive growth trends we’ve enjoyed recently.

Our new issue of Market Watch is out now.

 

More insights are inside the issue, including a breakdown of current economic factors influencing the markets.

Read our quarterly market commentary today to get a better idea of our investment approach.

Click here for the full issue.

 

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One-Day Point Drop: Reaction Commentary

Norm Boone / Feb 6, 2018 / Market Commentary

The market had the largest one-day point drop ever on Monday, February 05, 2018.


The markets are now down. Oh, wait, the markets have recovered. Are they recovered? Should you be worried?

We don’t think so.

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Market Watch 2017 Q4 - Mosaic’s Quarterly Market Commentary

Kevin Gahagan / Jan 17, 2018 / Investments / Market Commentary

2017 marked a year of widespread data breaches, the beginning of the Trump presidency, devastating hurricanes, wildfires that raged throughout California, and a cryptocurrency frenzy reminiscent of the Dot.com bubble. However, through it all, 2017 saw a long, steady rise in the stock markets.

It was a year of record highs as we saw the NASDAQ surpass the 7,000 mark and the Dow Jones Industrial Average roar past the 25,000 mark. US large cap returns reached 21.8%, pushed by the technology sector’s rise of 35.4%. Although small cap stock returns were lower in comparison, they still returned a very positive 14.7%. As strong as US market returns were, international markets performed even better.

All of the encouraging economic trends seen in 2017 makes us optimistic about the prospects for 2018. We are currently in the second longest economic recovery in US history.

With this in mind, many argue a recession must be imminent.

But positive economic data in the US and in most countries globally gives us a less pessimistic outlook. Labor markets are strong, economies are growing around the world, and consumer and investor confidence is high.

In addition, consistently low inflation, falling unemployment, and rising standards of living around the world all offer reason for optimism about the year ahead.

 

Our new issue of Market Watch is out now.

More insights are inside the issue, including a breakdown of current economic factors influencing the markets. Read our quarterly market commentary today to get a better idea of our investment approach.

Click here for the full issue.

 

Read more...

Market Watch 2017 Q3 - Mosaic’s Quarterly Market Commentary

Kevin Gahagan / Oct 27, 2017 / Investments / Market Commentary

There was solid economic growth and rising values in markets around the globe in the third quarter. 

This trend held for all major asset classes—both equity and fixed income. In the US, both large and small company stocks generated solid returns for the quarter. This continued the trend seen so far this year and throughout 2016.

Given the more recent decline in the value of the US dollar, international equity returns have been even more robust than those in US over this period.

 

Further summary:
  • Domestic stocks performed well year-to-date. The S&P 500 Index (US large companies) and the Russell 2000 (small US stocks) rose 14.2% and 10.9% respectively.
  • Equities in the developed countries overseas enjoyed substantial gains with the MSCI EAFE Index (large companies) returning 20.5% while the EAFE Small Cap Index rose 25.8%.
  • Emerging market stocks have risen 28.1% over the last twelve months (MSCI Emerging Markets Index).
  • Domestic bond market returns faced a headwind of rising interest rates in 2017, yet still delivered modestly positive returns in most categories.
  • Economists expect moderate inflation in 2018. The Fed can be expected to continue raising interest rates while it also seeks to reduce its balance sheet. We believe they’ll do both gradually with care to limit  economic impacts.

 

More inside the issue, including a breakdown of current economic factors influencing the markets:

Click here for the full issue.

 

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Market Watch: Our Take on the Second Quarter of 2017

Mosaic / Jul 27, 2017 / Investments / Market Commentary

Stocks have been doing very well, especially US markets, emerging markets, and the worlds developed economies. But what about interest rates and bond returns? And whats in store for the US economy?

Summary

Stocks enjoyed strong positive returns over the last 12 months, in both the US and overseas.

US markets, as represented by the S&P 500 Index, rose 17.9% in the last 12 months. Small US stocks were even better at 24.6% (Russell 2000).

The world’s developed economies, as represented by MSCI EAFE, rose 20.8% over the last year while small overseas companies were up 23.6%.

Emerging market stocks rose 24.2% year-to-date (MSCI Emerging Markets Index).

With interest rates rising, bond market returns over the past year have been impacted and most bond indexes were slightly negative.

Economists believe that inflation will remain benign for the immediate future, and that interest rate increases from the Fed will likely be implemented slowly, with careful consideration.

Given the variety of alternative strategies we hold, inevitably some performed better than others during this period. The category as a whole was comfortably positive. Among the leaders were timber and business development companies.

More inside the issue, including a breakdown of current economic factors influencing the markets:

Click here for the full issue.

 

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Market Watch: Quarterly Commentary from Mosaic

Mosaic / Apr 20, 2017 / Investments / Market Commentary

Every quarter, our investment management committee produces Market Watch, Mosaics take on the markets and the current economic affairs that influence them. The first edition of the year has just been published, and were excited to share our commentary with you. 

Summary
  • US markets enjoyed strong performance across the board for the twelve-month period ending March 31, 2017.
  • The S&P 500 Index posted a 17% return for the twelve months ending March 31.
    US small stocks did even better.
  • Overseas, the developed world benefitted from improving exchange rates as well as strengthening economies, which helped push stock returns over 10%.
  • With commodity prices recovering and the developed world needing more goods, outlooks brightened and emerging market stock returns averaged over 17%.
  • Bonds were largely positive, although there was little to no price appreciation, so returns were relatively low.
  • Global real estate stayed positive, but generated only mid-single digit returns.
  • Alternatives helped to boost overall returns, led in particular by oil & gas pipeline/infrastructure companies, timber, emerging market bonds and business development companies. 
 
Click here for the full issue.

 

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Market Watch: Our Take on the Fourth Quarter of 2016

Mosaic / Jan 26, 2017 / Investments / Market Commentary

Every quarter, our investment management committee produces Market Watch, Mosaics take on the markets and the current economic affairs that influence them. The fourth quarter edition has just been published, and were excited to share our commentary with you. 

Summary
  • US stocks were the big winners in 2016. All three major indices reached all-time highs.
  • With Trump's election, markets are anticipating economic growth via lower taxes and fewer regulations.
  • Markets remain anxious about his lack of political experience, threats about world trade, and the absence of a detailed economic plan. 
  • Small stocks and value stocks out-performed large stocks and growth stocks. 
  • Bonds ended the year positive, despite falling at the end of the year due to rising interest rates in anticipation of a faster growing economy in 2017. 
  • International equities produced positive returns in 2016, led by emerging market equities. 
  • Alternative investments, as a group, contributed positively to portfolio growth. 
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Market Watch: Our take on 2016's Third Quarter

Mosaic / Oct 18, 2016 / Investments / Market Commentary

Every quarter, our investment management committee produces Market Watch, Mosaics take on the markets and the current economic affairs that influence them. The third quarter edition has just been published, and were excited to share our commentary with you. 

Summary
  • U.S. stock markets (both the S&P 500 Index and Dow Jones Industrial Average) reached record highs in the 3rd quarter.
  • Investment returns in all investment asset classes were strongly positive in both the 3rd quarter and year-to-date. As a result, one-year returns across the board are in solidly positive territory.
  • Despite continuing challenges facing global economies, economic growth has been generally positive. The U.S. economy continues to be among the strongest economies globally.
  • Inflation in the U.S. and in much of the world continues to be quite low. In the U.S., as of August, “core inflation” was running at an annual rate of 2.3%.
  • The U.S. federal funds rate remains at a historic low. It is expected that the Federal Reserve will move to raise rates—possibly toward the end of 2016 and almost certainly in 2017.
  • While global risks abound, there continues to be a reasonable basis for optimism about the course of the U.S. economy and financial markets.
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Market Watch: The Second Quarter

Mosaic / Jul 21, 2016 / Investments / Market Commentary

We're halfway through 2016, and the second quarter issue of Mosaic's Market Watch, our quarterly market commentary, has just been released. 

summary

  • Markets and returns were almost universally positive for the second quarter of 2016, save for Europe's pullback as a result of the Brexit vote in the UK. 
  • While most of the world quickly recovered from the initial shock surrounding Brexit, Europe as a whole has not quite made it back to "even."
  • With the concerns about the direction of the world economy that had the markets in a tizzy in January and early February of this year, in addition to late June's Brexit pullback, investors actively sought the safety of bonds. As a result, bond returns continued to be attractive. 
  • Results for alternative investments were pretty close to universally attractive in 2016, but the negative environment of 2015 creates an unhappy impression for one-year numbers. 
  • The US economy continues its slow and unsteady march forward, remaining among the world's strongest.
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Market Watch:  1st Quarter, 2016

Mosaic / Apr 27, 2016 / Market Commentary

Summary

  • US markets fell 13.3% in January and early February, raising concerns that a recession could be on the horizon. These concerns were further amplified by China’s turmoil, the rising dollar, and worries over US corporate earnings.
  • Alternative investments were generally positive for the quarter, led by emerging market bonds, global real estate and timber.
  • Value stocks finally outperformed growth stocks at all levels. Large company value stocks were up 1.6% for the quarter versus 0.7% for growth. Smaller stocks were more dramatic, with value outperforming growth 1.7% to -4.7%.
  • Bonds benefitted from a “flight to safety” arising from the recession worries. All bond categories rose for the quarter and all were positive for the year.
  • Portfolio results for the twelve month period still look bad as they include the difficult middle quarters of 2015.
  • Consumers are primed to help the US economy continue to grow: sentiment is positive, debt is low and housing values and net worth have been rising.

 

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Market Watch:  4th Quarter 2015

Mosaic / Feb 2, 2016 / Market Commentary

Summary

  • 2015 marked the second frustrating year in a row for investors.
  • Virtually no broad investment categories showed strong returns; some were notably negative.
  • Stocks produced varied returns this year. Bonds also were mixed and Alternatives displayed a within-range-of-expectation non-correlated independence that disappointed investors.
  • The US economy continued its post-recession recovery and signs of resurgence were seen in both Europe and Japan.
  • Key influences on negative results included the continued increase in strength of the US dollar and the fall in the price of oil, along with the turmoil in the Chinese economy
  • These influences are clearly cyclical in nature and thus we expect to see turn-arounds in each of these influences, although it’s impossible to say reversals will occur in 2016.

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Market Watch:  3rd Quarter 2015

Mosaic / Jan 26, 2016 / Market Commentary

Summary

  • Weak performance was evident throughout markets globally this quarter.
  • The U.S. Gross Domestic Product increased at a 3.9% annualized rate in Q2.
  • As of September 30th, the annualized U.S. core inflation rate stood at 1.8% (core inflation excludes both food and energy). U.S. “headline inflation was only 0.19% given the steep decline in energy prices. Europe’s inflation rate declined reaching slightly negative territory.
  • China’s difficulty in transitioning its economy and opening up to freer markets hit some big snags this quarter. The impacts were felt throughout the global markets.
  • China devalued its currency by 3% in an effort to boost its economic activity.
  • The 10-year Treasury yield fell to 2.06% as many investors moved to the greater safety of U.S. government bonds.
  • The U.S. employment rate dropped to 5.1%.

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Market Watch 2nd Quarter 2015

Mosaic / Jul 22, 2015 / Market Commentary

Summary

  • Weak performance all around
  • The US stock market returns were just positive for quarter, but still  attractive for year
  •  The US Gross Domestic Product contracted 0.2% in Q1, but economists expect improvement in Q2
  • Q2 inflation remained low at 0.46%
  • Rising interest rates caused most bonds to fall in Q2
  • The Fed announced plans to raise interest rates by the end of 2015
  • The US unemployment rate dropped to 5.3% in June
  • Currency valuations steadied in Q2, but hurt 12 month results
  • Greece risks exiting Euro-zone
  • China’s market rises, then falls precipitously
  • Alts are in a uniquely poor period for performance
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Market Watch 1st Quarter 2015

Mosaic / May 18, 2015 / Investments / Market Commentary

Summary

  • The U.S. stock market reached another record high, and then struggled
  • Unlike last year, international stocks outperformed US stocks this quarter
  • ECB’s own QE program started to boost Europe’s economy
  • Euro hit an 11-year low against the US dollar
  • Fed signaled intent to raise interest rates
  • Bonds, once again, produced positive returns, with rates declining
  • For 2014, inflation remained low at 1.7% (excluding food and energy).  If these categories are included, inflation was flat for the full year.
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