It’s hard to have a recession when earnings and equity returns are improving. We see potential opportunities in U.S. value stocks as well as international and emerging markets. The U.S. stock market is up more than 16%, international developed markets are up more than 20% and emerging markets are up over 30%.
The same catalysts driving the U.S. stock market are supporting high-yield bonds. High-yield spreads are tight, but we don’t see a looming reason for them to start widening given current economic growth trends. Demand is picking up for oil-field service providers as the oil price rises, and while contracts with oil producers are less lucrative, the service providers have cut costs and become more efficient operators.
We currently see the best value opportunities in emerging markets. Our focus is on value (fundamentally cheaper assets) and momentum (well-performing stocks). “Smart beta” refers to a method of passive investing that considers a range of stock “factors” that over time have been successful in reducing risk and/or enhancing returns.
As the California wildfires got closer, Leisa Walston and her three sons evacuated their home in the middle of the night with only the clothes they were wearing. Stuck for hours in a traffic jam of fellow evacuees, they sat and watched as flames engulfed the mountains surrounding their home.