Quarter Recap

by Derek Felske, Chief Investment Officer & Dan Brown, Investment Officer
Annex Wealth Management

During the first quarter of 2017, the vast majority of global financial markets posted positive returns. Following a strong year in 2016, U.S. large cap stocks advanced for the sixth consecutive quarter. In fact, the S&P 500 Index has now advanced in 16 of the past 17 quarters. International stocks, which have lagged domestic issues since the global financial crises, posted even better returns. We remain attracted to selected international equity markets due to their attractive relative valuations, higher dividend yields, better growth prospects, and more favorable demographics.
Within our fixed income allocation, the tilt towards more credit-sensitive instruments like high yield, preferred stocks and bank loans and away from more interest rate-sensitive issues continued to add value. Credit-sensitive fixed income securities tend to perform best during periods of economic growth punctuated by solid corporate fundamentals, healthy credit trends and low corporate default levels.
The strong rally in stocks was based on several factors: accelerating corporate earnings growth, higher oil prices, stabilization in the value of the U.S. dollar, improving global growth prospects, and lastly, expectations that the Trump administration and the Republican-led Congress will implement a pro-growth agenda that includes tax reform, deregulation, and infrastructure spending.
Although the House’s failure to repeal and replace Obamacare in late March was a negative surprise, we do not believe it derails the administration’s overall agenda. In fact, it may accelerate consideration of more business friendly tax proposals.
As we enter the second quarter, we are encouraged that Wall Street first quarter earnings expectations are holding steady, a marked departure from recent years where expectations came down rapidly near quarter end. This is significant because we’ll need to see earnings growth materialize for U.S. stocks to move higher from current levels. Despite the positive fundamental backdrop, there are risks in the financial markets that we continue to monitor. These include a surge in inflation that causes the Federal Reserve to raise interest rates faster than market participants expect, a trade war, foreign election results, and delays to the administration’s pro-growth policies.
Our Investment Committee continues to believe a balanced portfolio is the most prudent course with an eye towards managing risk, taking advantage of valuation disparities, monitoring the geo-political environment and focusing on fundamentals.

Safer Than Paper: Get Secure Online Performance Reports

More and more Annex Wealth Management clients are experiencing the security, convenience, and organizational benefits of accessing their quarterly performance reports online.
• Secure, encrypted means for viewing confidential data
• Can prevent identity theft through lost/stolen US Mail
• Reduce the amount of paper sent to you from us, keeping costs down and service high
• Securely review past reports at your convenience
A notification will be sent to your preferred email address when reports are available to view. No information will be sent via email other than a notification. You will then login to a secure reporting site to access your accounts and report.

Register for secure access today!
Visit annexwealth.com/enable

  Advisory Services offered through Annex Wealth Management®, LLC. Securities offered through H. Beck, Inc Member FINRA & SIPC. Annex Wealth Management®, LLC and H. Beck, Inc are separate and unrelated companies. This site has been published for residents of: AZ, CA, FL, IL, MN, NC, SC, TN, TX & WI ONLY. By entering you certify you are a resident of one of those states. All information herein has been prepared solely for information purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell, any security.  

 

 

 

/* */

<div style=”display:inline;”>
<img height=”1″ width=”1″ style=”border-style:none;” alt=”” src=”//www.googleadservices.com/pagead/conversion/940453323/?label=BOQ1CJ2Rk24Qy9u4wAM&amp;guid=ON&amp;script=0″/>
</div>