Financial markets have been breathtakingly strong so far in 2019. In fact, it’s been the best start for the US stock market since 1992, with the S&P 500 posting a 13.1% total return through mid-March. Another impressive stat is that the NASDAQ began the year with nine straight up weeks – a feat not seen since 1964. International stocks, corporate bonds, REITs, and midstream energy assets have also posted remarkable returns.
In the world of inflation, expectations are important. If you ask most people in the US what they believe inflation is expected to be, they are likely to say around 2-3%…why? Because that is what they have experienced over the past 5-10 years.
A Tale of Two Halves: If we simply evaluate global market returns last year, one might conclude 2016 was a fairly uneventful. Global stocks and bonds finished up 8%, and 4% respectively, which is generally what you’d expect in a typical year. However, if we dive a bit deeper “uneventful” wouldn’t be an appropriate description.