CAMS Weekly View from the Corner – Week ending 2/23/2018
February 26, 2018
If we are going to operate in a historically highly valued stock market, such as we are currently, then we absolutely need consistent on-going economic growth to support that backdrop lest we experience a significant drawdown. If you are a frequent reader of these Weekly Views you will recognize our on-going economic observation vigilance which continues today.
The Conference Board, a global independent business membership and research association publishes a well known Leading Economic Index which is known as LEI for short. This index is comprised of ten different forward looking measures in order to get a sense of the near-future economic growth outlook.
This past week the LEI posted a stronger than expected result which points to robust economic growth for the front half of 2018. In fact, the LEI itself has accelerated its reading in recent months pointing to accelerating economic growth.
The above chart is published by the Conference Board and depicts the Leading Index via the blue line. The red line is the Coincident Index which offers the state of our current economic strength. As market participants we are far more focused on the forward view being stocks are bid up (or down) with forward expectations as the focal point.
Speaking to the strength of the most recent LEI result it is noteworthy that all ten components comprising this index reflected a positive contribution. With this, clearly said strength is widespread and adds to the view that on-going economic strength is solid. As offered previously; this is a necessity to support our highly valued markets.
I wish you well…
Ken Reinhart
Director, Market Research & Portfolio Analysis
Portfolio Manager, CAMS Spectrum Portfolio
Footnote:
H&UP’s is a quick summation of a rating system for SPX9 (abbreviation encompassing 9 Sectors of the S&P 500 with 107 sub-groups within those 9 sectors) that quickly references the percentage that is deemed healthy and higher (H&UP). This comes from the proprietary “V-NN” ranking system that is composed of 4 ratings which are “V-H-N-or NN”. A “V” or an “H” is a positive or constructive rank for said sector or sub-group within the sectors.
This commentary is presented only to provide perspectives on investment strategies and opportunities. The material contains opinions of the author, which are subject to markets change without notice. Statements concerning financial market trends are based on current market conditions which fluctuate. References to specific securities and issuers are for descriptive purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. There is no guarantee that any investment strategy will work under all market conditions. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. PERFORMANCE IS NOT GUARANTEED AND LOSSES CAN OCCUR WITH ANY INVESTMENT STRATEGY.
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