Key Themes for the Next Seven Years

As we enter 2016, we are almost seven years into a domestic equity bull market run that has defied many investors’ expectations in both duration and magnitude. This equity market strength has brought forward years’ worth of returns. As a result, today’s landscape offers few markets priced for compelling opportunities. Successfully navigating these compelling options will necessitate more discernment in the absence of uniformly accommodative central bank easing.

Creative Solutions in a Returns-Challenged World: Reinsurance

Reinsurance is a risk transfer service for insurance companies. When insurance companies write enough policies to become concentrated in one area or they need to write more policies to keep the relationships they have, they will engage a reinsurance firm.

Has Gold Regained Its Luster?

The majority of Balentine’s communications in 2016 have centered around the deteriorating market conditions and the weakening effectiveness of central bank policies to assuage the market’s concerns. Given our projections for meager economic growth, we have had to turn to creative solutions for client portfolios to meet their long-term objectives. One such solution is an art-based decision to allocate to gold.

Has the likelihood of a recession in 2016 increased?

Our decisions to derisk in the fall of 2015 have sharply reduced drawdowns in the face of recent months’ equity market price action. Last month, we addressed the likelihood of a recession in 2016 and discussed the possibility of further derisking Balentine client portfolios. In March, Balentine’s models were bearish for a seventh straight month. Each time Balentine’s models have produced seven straight monthly bearish signals (2000-2001, 2002-2003, and 2008), a significant drawdown has occurred.

The Prisoner’s Dilemma in Oil

Across the investment landscape in Market Risk, the opportunity top of mind for many investors is the potential for a rebound in commodity prices, most notably oil. Commodities, oil, and oil-related equities could rally, as assets tend to have sharp rallies when sentiment and technicals get overly bearish. However, the key word for us is “tradeable.”

How likely is a recession in 2016?

Over the last six months, we have taken decisive steps to preserve capital. The volatility and uncertainty we anticipated late last summer is playing out now, and several markets are moving closer to pricing in a recession.

What do Janet Yellen’s Recent Interest Rate Comments Mean? Taking a long-term perspective on interest rate growth

Throughout the whole of 2015, markets speculated when the Federal Reserve would finally take the plunge and begin raising interest rates. After fits and starts all year, the Fed raised interest rates in December. It also laid out a plan to continue to raise interest rates by 25 bps each quarter until we reached more normal levels. After the rough start to 2016, however, the Fed last Thursday signaled a potential change in policy.

2016: A Year of Transition

“The only function of economic forecasting is to make astrology look respectable,” John Kenneth Galbraith, an irreverent economist, once said. Yet each January strategists fill the airwaves, prognosticating what the coming year may bring. In this vein, Bob Reiser, Senior Advisor to the Investment Strategy Team, once again publishes his annual forecast.