Show me the performance for the year and I should
be able to tell you something about the economic and political events for the
year. I may not be able to tell you the specifics, but I should tell you
whether it was a "good" or "bad" year in terms of
economic growth, uncertainty, risk, and confidence. Looking back over
2016, you would not know that it was a year of political upheaval.
Stocks did well even after a poor first two
months. Global equity markets did not share in the optimism of the
US, but it was a still a positive year. The real stock gains were in small cap
and value which both posted returns of over 20 and 30 percent
respectively. Growth stocks also gained double digits.
Bonds generated a marginal return
which suggests that economic growth is expected to be higher and
inflation premiums have started to enter the market. High yield and credit
index ETF’s generated superior returns which are consistent with
better economic prospects. Emerging market bonds also performed well
even though developed bond markets were a marginal performer.
Commodities, as measured by the Bloomberg
index, posted yearly gains after a multi-year slump.
The political angst was not translated
into financial markets or at least not in the form of
risk-off behavior. Of course, 2017 could see something very different as
the populism of 2016 is expected to be converted into macro policies in 2017.
No comments:
Post a Comment