March 31, 2017
Beyond Numbers
Last Quarter Round Up
The alleged “Trump Rally” continued in the first quarter of 2017. The S&P 500
index was up +6.07% for the quarter. In a notable shift from the past, the
International EAFE index finished the quarter up +7.25% and Emerging Market
index was up an impressive +11.44%. Both foreign indices beat the U.S. market,
which has been rare over the last 6 years. The Aggregate Bond index was up
+0.82%.
We’re Growing!
On March 7, 2017 Barron Financial
Group hired its first new advisor.
John Seagrave joined our firm from a
previous career in the Athletic
Marketing department at UCONN.
Sandra and I spent much of 2016
developing and investing in our
technologies and business processes
to better accommodate this expected
expansion. We feel it is time to
bring our message to a broader
audience. And we believe John can
help us do that. John and his fiancé
Marissa currently live in Vernon,
Connecticut and John expects to be
building his business towards the
Hartford area. Please join me in
wishing John the best of luck in
expanding and refining his craft of
financial advising and building a
robust base of clients.
As I write this newsletter, the
temperature outside is climbing
towards 80 degrees. I’m sure that
temperature won’t last here in
Connecticut in early April, but it’s a
sure sign spring is here. I’m looking
forward to getting outside to start the
spring clean-up chores. I hope you
all get a chance to get outside and
enjoy the improving weather.
Best Regards,
Jim Thibault, Managing Partner
[email protected]
www.barronfinancialgroup.com
Phone: 860-489-0432
What do you think?
Email us with comments, questions or
topic ideas to:
financial.questions@
barronfinancialgroup.com
e’re Growing!
All the global stock markets started the year strong, only the S&P 500 went flat just
past mid-quarter. My sense is that the utter collapse of the GOP healthcare bill
played a role in that flattening. Many view the failure of President Trump’s first
legislative initiative as a likely derailment of his overall agenda, not least of which is
tax reform. The markets may have that same view. International and Emerging
markets most likely enjoyed their positive performance based on the long-awaited
appearance of indicators of economic recovery. Economic activity, along with
projected Gross Domestic Product (GDP), was up in much of the world economy.
Some investors were surprised to see the bond market finish the quarter up, given
the Federal Reserve (FED) rate increases in both December 2016 and March
2017. I continue to believe this is a positive move toward more standard monetary
policy, and a sign we are moving past the damage caused by the 2008 global
financial crisis. It is also an indicator that if interest rates rise in a controlled
fashion, the bond market may not implode as so many fear.
Current Quarter Outlook
Last quarter I suggested the “Trump Rally” could run into some challenges due to
sentiment shift and legislative reality. That proved salient with the collapse of the
Obamacare repeal and replace bill. As I mentioned above, this “legislative reality”
and the realization that the new U.S. leader didn’t have all the answers, sent global
stocks surging while the U.S. market went flat. This might suggest that the U.S.
trend of economic and market dominance may be coming to an end. But unlike
the mainstream media, I don’t believe the demise of the healthcare bill portends
the derailment of the Trump agenda. In my view, the healthcare bill died an
unexpected death in the House of Representatives, but I suspect it would have
died in the Senate anyway. And with that, focus can now shift to something that
most Americans, and Legislators, want…tax reform. Tax reform won’t be easy, but
there appears to be a clearer path to pursue this than there ever was for
healthcare reform. And, importantly, if the U.S. does implement some version of
tax reform, it could improve corporate earnings, consumer sentiment and business
investment. All of which would be positive for U.S. stocks. Thus, while the trend of
U.S. dominance might appear to be closing, it’s too early to call it over.
I remain comfortable that we won’t see a recession in the U.S. in 2017. I expect
slow to moderate growth to continue. My equity strategy is to remain fully
invested, a slight overweight on the U.S., still underweight International and a
slight underweight to Emerging Markets. In fixed income, I remain invested with
greater exposure to credit paying higher yields. I am neutral on Alternative
investments.
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