The global economic picture brightens
For the first time in years, the world’s major economies all appear to be on the road to recovery. Heading into the second half of the year, clarity is improving on many fronts, but questions remain: Can U.S. markets sustain their winning streak? Will Europe finally turn the corner? What will rising rates mean for investors? And will politics upend everything? Here are four key themes and investment implications to consider as you position portfolios for the balance of 2017 and beyond:
Across the Globe, Momentum Builds
GDP % Estimated
Source: International Monetary Fund, World Economic Outlook Database, April 2017. 2017 GDP figures are estimates.
“The world has shifted and today it feels like global growth is in ascendance. But with that comes higher valuations, especially in the United States. In my portfolios, I am finding it easier to identify attractively valued companies abroad.”
Market Levels Suggest It May Be Time to Rebalance
% Allocation of MSCI ACWI Ranges — Last 20 Years
Sources: MSCI, RIMES. Market capitalization ranges represent each region’s percentage of the total market capitalization for the MSCI All Country World Index for the 20 years ended 5/31/17.
Interest Rates Are Rising … Gradually
Interest Rate Changes by Major
Central Banks Since 2013
Sources: Central bank websites, FactSet as of 6/14/17.
Fundamentals Trump Politics
Political Uncertainty and Market Volatility
Sources: Thomson Reuters as of 5/31/17. Global volatility is the average of the VIX and VSTOXX Indexes, which represent equity volatility in the U.S. and Europe, respectively.