Sitting on the fence, waiting for the turn in macro economic indicators will disappoint and leave opportunity on the table. Rising correlations show investors are ignoring relative values among industries and assets, rather reacting to day-to-day signals on the economy. It is more likely that deflation and low growth will be the environment into the second half of the year, underscoring the need to diversify assets from a traditional long equity and bond portfolio.
Opportunities exist in right sized industries and companies and across asset classes. For companies that downsized, the benefits of incremental sales falling to the bottom line EPS have been borne out in Q2:10 earnings results. Indeed, the S&P 500 has rebounded 7.8% since July 2 despite weak economic data as corporate earnings have been stronger than analysts estimated on marginally higher revenues. With 53.4% of the S&P 500
At CoreStates, a foundational belief is in the unpredictability of the future. Few would argue with this simple truth. Yet, few in the financial services industry honor this fact in the design of their services to clients. Most, in fact, tout their ability to predict the future as a key reason to entrust your assets to their supervision and management (and fees).
2009 Outlook The Bottom Line CoreStates remain positive about the ability of the U. S. and international investment markets to provide patient investors with favorable, inflation-beating, long-term returns. But, we also believe the changing priorities of our government and of other administrations worldwide can make our future economic prospects decidedly less favorable than they have been. The following points highlight what we see for 2009 in the major areas pertinent to investors.
Economy – The global downturn will continue, and is likely to worsen through 2009 and possibly much longer as governments and financial institutions worldwide attempt to limit its severity at the expense of extending its duration. U. S. unemployment will rise well above 7% and production will decline markedly as businesses attempt to align their output with shrinking demand.
Inflation – The widespread actions of governments and financial institutions to support over-extended borrowers with additional More >