All of us at Legacy Wealth Planning will be happy when Monday, April 18th finally arrives. As a reminder, that date is this year’s deadline for your 2015 taxes. We hope all of you were able to find your 1099’s from LPL Financial and/or we were able to assist you during the last couple of months giving you any information that you required for your tax reporting.
US equity markets have largely recovered from the January swoon that made so many of us uncomfortable. The limited recovery of oil prices (considered now a proxy for global economic conditions/growth) has calmed many investors’ nerves. Global economic conditions/growth matter to investors because it defines the ultimate pace of activity that creates value for countries, companies, and consumers.
We have also just entered into corporate earnings reporting season for US companies. The consensus of analysts expects that S&P 500 companies will post a 7% drop in earnings growth in the first quarter of 2016 versus the first quarter of 2015. The expected decline is primarily driven by the stronger U.S. dollar and the decline in oil prices. LPL Financial Research expects more than a handful of firms may cite global growth concerns (mainly in emerging markets and especially in China) when discussing first quarter results and providing guidance for the second quarter of 2016 and beyond. The key is that expectations for earnings are now muted and that if a positive surprise occurs, this may affect some markets positively.
Emerging markets are another subject that deserves attention today. LPL Financial Research believes that earnings will improve for this asset class. At first glance, one would assume this improvement is due to stability starting to occur in commodity prices – something emerging markets greatly depend upon, but LPL believes the revision in earnings estimates extends far beyond commodities and into consumer and technology companies. LPL is by no means shouting an “all clear” for this volatile assets class, but by the time such clarity is revealed, valuations will likely be higher than they are today.
As always, we appreciate your business. Please do not hesitate to call us with any investment questions you may have! – Mark
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Investing in stocks includes numerous specific risks including: the fluctuation of dividend, loss of principal, and potential liquidity of the investment in a falling market. Because of its narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to greater volatility than investing more broadly across many sectors and companies. All investing involves risk including loss of principal. The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Referenced material: LPL Financial Weekly Economic Commentary and LPL Financial Weekly Market Commentary, both dated April 12, 2016.