JFL

Jan. 30, 2017

Investment Outlook - Q4 2016

Economic Review

  • Equity markets rebounded in response to corporate optimism following the U.S. election and the continued recovery in energy and material prices.

  • Overall earnings growth has improved along with economic momentum.

  • The U.S. Federal Reserve declared a broadly expected interest rate hike, increasing the overnight rate by 25 bps to 0.75%.

  • In the long term, equity markets should become more discriminating as interest rates begin their long road back to normal levels.

Investment Outlook

  • We believe the global economic growth trend will continue on its current modest path.

  • Most developed economies, including China, will face weaker working age population growth as baby boomers move into retirement.

  • Global productivity growth continues to decline, however we remain optimistic in the private sector’s ability to innovate.

  • Market valuations, particularly in the U.S., are viewed above average, but still not at extreme levels.

 

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