{"id":23724,"date":"2017-01-21T10:00:55","date_gmt":"2017-01-21T16:00:55","guid":{"rendered":"http:\/\/www.discoverclarksville.com\/articles\/?p=23724"},"modified":"2017-01-21T03:40:23","modified_gmt":"2017-01-21T09:40:23","slug":"frazier-allen-2017-outlook-opportunity-and-uncertainty","status":"publish","type":"post","link":"https:\/\/www.discoverclarksville.com\/articles\/2017\/01\/21\/frazier-allen-2017-outlook-opportunity-and-uncertainty\/","title":{"rendered":"Frazier Allen &#8211; 2017 Outlook: Opportunity and Uncertainty"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" title=\"F&amp;M Investment Services - Raymond James - Clarksville, TN\" src=\"http:\/\/www.clarksvilleonline.com\/wp-content\/uploads\/2012\/03\/FM-Investment-Services-Raymond-James.gif\" alt=\"F&amp;M Investment Services - Raymond James - Clarksville, TN\" width=\"130\" height=\"122\"\/><strong>Clarksville, TN<\/strong> &#8211; Each quarter, the Raymond James Investment Strategy Committee completes a detailed survey sharing their views on the investment environment, and their responses are the basis for a discussion of key themes and investment implications covered in this quarter\u2019s <em>Investment Strategy Quarterly<\/em>.<\/p>\n<p>Read an overview of the key themes below, or download the entire publication for a more thorough view of the markets and the economy.<\/p>\n<div id=\"attachment_372312\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a target=\"_blank\" href=\"http:\/\/www.clarksvilleonline.com\/wp-content\/uploads\/2017\/01\/2017-Outlook.jpg\"  class=\"thickbox no_icon\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-372312\" class=\"size-medium wp-image-372312\" title=\"The Raymond James Investment Strategy Committee weighs in on market trends, economic conditions and the outlook for investors in 2017.\" src=\"http:\/\/www.clarksvilleonline.com\/wp-content\/uploads\/2017\/01\/2017-Outlook-480x152.jpg\" alt=\"The Raymond James Investment Strategy Committee weighs in on market trends, economic conditions and the outlook for investors in 2017.\" width=\"480\" height=\"152\"\/><\/a><p id=\"caption-attachment-372312\" class=\"wp-caption-text\">The Raymond James Investment Strategy Committee weighs in on market trends, economic conditions and the outlook for investors in 2017.<\/p><\/div>\n<p><!--more--><\/p>\n<h3>Headwinds&nbsp;and Tailwinds<\/h3>\n<p>Economic and financial market headwinds for the next six to twelve months include a strong dollar, rising interest rates and policy uncertainty. Top tailwinds include a healthy job market, potential for fiscal stimulus and accommodative monetary policy.<\/p>\n<h3>U.S. Economy<\/h3>\n<ul>\n<li>\u201cThe pre-election outlook held that slowing population growth \u2013 resulting in slower labor input and economic growth \u2013 was the \u2018new normal.\u2019 Post-election sentiment suggests that we are going to get some fiscal stimulus, but that will likely be ineffective in boosting growth on a long-term basis due to demographic constraints.\u201d<\/li>\n<li>\u201cI\u2019m not optimistic that we\u2019ll see a big increase in GDP growth. Economists have been raising their growth fore\u00adcasts for next year, but only slightly, so you\u2019re looking at a little over 2% in 2017. We could see a quarter or two of strong growth but it\u2019s not sustainable, unless we increase immigration or get a sharp rise in productivity growth.\u201d<\/li>\n<li>\u201cWhile there are a number of uncertainties in the economic outlook, the largest risk is in global trade. A trade war would boost inflation through higher import costs and disrupt supply chains in U.S. manufacturing. Cooler heads should prevail, but a trade war would undermine economic growth at a time when global trade is already slowing.&#8221;<\/li>\n<li>\u201cThe job market should continue to tighten in the near term, putting some upward pressure on wages, although consumer price inflation is likely to be moderate. The Fed\u00aderal Reserve should continue to gradually normalize short-term interest rates. Increased government bor\u00adrowing should lift long-term interest rates.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Scott Brown, Ph.D.,<\/strong> Chief Economist, Equity Research<\/p>\n<h3>International Equity<\/h3>\n<h4>Europe<\/h4>\n<ul>\n<li>\u201cThe pollsters got something right by correctly predicting that the \u2018no vote\u2019 would prevail in the Italian constitutional referendum. In my opinion, this vote is being blown up as something which massively undermines European stability.\u201d<\/li>\n<li>\u201cThere is no doubt that a backlash against the European polit\u00adical elite is happening and clearly there are issues to work through in Italy. Banks remain troubled, the political system is uncertain and the people are unhappy, but my feeling is that the Italians do not want to leave the European Union.\u201d<\/li>\n<li>\u201cThe direction of Brexit is, to me, quite clear. The timetable is slower, practical realities are showing a \u2018soft\u2019 Brexit as the likely endpoint, rather than a more divisive, aggressive kind of breaking up of relations between the UK and the European Union.\u201d<\/li>\n<li>\u201cEurope is not perfect \u2013 there are going to be bumps in the road. However, versus three or six months ago, there\u2019s a little bit of hope. The catalysts would be more earnings growth and potential political stability with the upcoming elections in Germany and France. Combine this with last year\u2019s big outflows from European equity markets, and opportunities may surface going forward.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Chris Bailey,<\/strong> European Strategist, Raymond James Euro Equities*<\/p>\n<h4>China<\/h4>\n<ul>\n<li>\u201cConcerns over Asia will be centered on China in 2017: the sustainability of growth, the banking system, the property market, and foreign exchange. However, the positive aspects which perhaps people are underestimating are the con\u00adtinuing reforms in China. And they are very impressive.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Chris Bailey,<\/strong> European Strategist, Raymond James Euro Equities*<\/p>\n<ul>\n<li>\u201cJust as labor force issues are coming to the forefront in the U.S. and demographic shifts are hitting home in Europe, China is now in a position where its labor force is starting to decline as well. It\u2019s a common refrain that China will get old before it gets rich. There\u2019s significant risk to all assets coming out of China, and I think it\u2019s very important to keep monitoring that.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Paul Berg, CFA,<\/strong> Portfolio Manager, Cougar Global Investments*<\/p>\n<h3>U.S. Equity<\/h3>\n<ul>\n<li>\u201cI think stocks are going substantially higher. I don\u2019t think the markets are overvalued or that the strong dollar will hurt corporate earnings. The markets are transitioning from an interest rate-driven secular bull market to an earnings-driven secular bull market.\u201d<\/li>\n<li>\u201cYou\u2019ve got six stages of emotion that investors go through and, right now, I think we\u2019re nowhere near exuberance or ecstasy or any of the other phases you come to before a secular bull market ends.\u201d<\/li>\n<li>\u201cPeople are woefully underinvested in the equity markets, and I do think the economy is going to pick up. The market is telling us something is happening, and it\u2019s good.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Jeff Saut, <\/strong>Chief Investment Strategist, Equity Research<\/p>\n<ul>\n<li>\u201cSo far, the rally we\u2019ve seen has been the kind of broad\u00adbased rally that you want at this stage. It\u2019s been led by higher betas, and financials and energy are finally coming around. It\u2019s not the narrow rally we saw last year.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Andrew Adams, CMT<\/strong>, Senior Research Associate, Equity Research<\/p>\n<ul>\n<li>\u201cNear term the market has a nice tailwind to it \u2013 it\u2019s com\u00adpletely convinced that fiscal stimulus is coming, which will generate GDP growth and make earnings targets much easier to achieve.\u201d<\/li>\n<li>\u201cI\u2019m pretty comfortable about earnings going forward if we do get tax cuts because the magnitude of the moves would be big. However, it\u2019s probably going to be tax reform rather than tax cuts \u2013 which takes a lot longer to do. The reality of these things actually happening may slow the rate of ascent.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 <\/strong><strong>Michael Gibbs, <\/strong>Managing Director of Equity Portfolio &amp; Technical Strategy<\/p>\n<h3>Fixed Income<\/h3>\n<ul>\n<li>\u201cDespite recent volatility, the fixed income markets really are not out of whack. We\u2019ve remained in an accommodative policy, which has not resulted in inflation, and bonds in general have stayed fairly strong.\u201d<\/li>\n<li>\u201cAsset allocation is important and, from a strategic stand\u00adpoint, we are staying the course. Rising interest rates and the widening of municipal market spreads further empha\u00adsize decent opportunities for fixed income.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Doug Drabik, <\/strong>Senior Strategist, Fixed Income<\/p>\n<ul>\n<li>\u201cMunicipal bonds are unbelievably attractive right now. They\u2019re trading above Treasuries in terms of yield across the curve, so for investors that pay high marginal tax rates, munis look fantastic.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Benjamin Streed, CFA, <\/strong>Strategist, Fixed Income<\/p>\n<ul>\n<li>\u201cInflation has bottomed. If you think the baton should go from central bankers to the fiscal policy makers, you have a reason to believe. Risk markets will continue to rally into the first quarter.\u201d<\/li>\n<li>\u201cNear-term risk markets have more room to run with eco\u00adnomic and fiscal policy optimism. Through Q1 of 2017, the market is going to do well. The curve is steep. There\u2019s a term premium. Let\u2019s not forget that we opened 2016 with a big downdraft. This is a retracement from Brexit low yields and not particularly concerning.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 James Camp, CFA, <\/strong>Managing Director of Fixed Income, Eagle Asset Management*<\/p>\n<h3>Real Estate<\/h3>\n<ul>\n<li>\u201cHousing is fine. It\u2019s not robust. Demographic trends are acting as a drag and housing isn\u2019t fueling economic growth like it has in past cycles, which in some ways could be a good thing. The two wild cards for housing in 2017 are inflation and interest rates.\u201d<\/li>\n<li>\u201cAffordability issues have been exacerbated because incomes haven\u2019t kept up with inflation. Construction costs \u2013 particularly in labor and permits \u2013 are likely to get worse, not better.\u201d<\/li>\n<li>\u201cOn infrastructure spending, I\u2019m more concerned about what it does to the inflation rate and the labor pool \u2013 both of which are strained right now.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Paul Puryear, <\/strong>Director of Real Estate Research<\/p>\n<h3>Energy and Oil<\/h3>\n<ul>\n<li>\u201cWith OPEC\u2019s announcement to cut supply, you would think oil prices should celebrate, and they did to a degree. Still, prices are considerably lower than where we thought they would be at this point in time.\u201d<\/li>\n<li>\u201cSaudi Arabia cutting production is a bullish signal for the market. Bullish in the sense of fewer physical barrels on the market but also in a psychological sense, because they finally called a truce after fighting a price war for the past two years. That changes how investors, and commodity speculators, think about downside and upside.\u201d<\/li>\n<li>\u201cThe fact that oil is not yet in the $60s is going to affect capital spending decisions by oil and gas producers across the spectrum around the world. Initial capital budgets will probably be on the lower end of expectations, but still mostly showing recovery from the prior year.\u201d<\/li>\n<li>\u201cHeadwinds for oil in 2017 include recovering production in Nigeria and Libya, unexpected supply growth in Russia, and a strong U.S. dollar.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Pavel Molchanov, <\/strong>Senior Vice Presi\u00addent, Energy Analyst, Equity Research<\/p>\n<h3>Alternative Investments<\/h3>\n<ul>\n<li>\u201cTwo trends we are seeing in the hedge fund industry are fee compression, driven by a decline in the average management fee charged, and increased liquidations relative to launches. In fact, though the average launch size has grown, 2016 is turning out to be the slowest year for new hedge fund launches since 2009.\u201d<\/li>\n<li>\u201cFor an ultra-high net worth investor, we believe a minimum strategic long-term allocation of 20% to alternatives is war\u00adranted. Though it depends on the client\u2019s risk\/return objectives, generally this allocation should be accomplished through a mix of hedge fund and private equity strategies, providing the ability to capitalize on the illiquidity premiums.\u201d<\/li>\n<\/ul>\n<p><strong>\u2013 Jennifer Suden, <\/strong>Director of Alternative Investments Research&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<div>\n<div>\n<table width=\"100%\" cellspacing=\"0\" cellpadding=\"0\">\n<tbody>\n<tr>\n<td width=\"62\" valign=\"middle\" height=\"100%\"><a href=\"http:\/\/www.raymondjames.com\/isq\" title=\"\"  target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.raymondjames.com\/pointofview\/resources\/images\/investingwell\/2924\/2924_investment-strategy.jpg\" alt=\"\" width=\"62\" height=\"80\" align=\"middle\"\/><\/a><\/td>\n<td align=\"center\"><a title=\"Read the full January 2017 Investment Strategy Quarterly\" href=\"http:\/\/www.raymondjames.com\/branches\/library\/features\/investment_strategy\/investment_strategy.pdf\" target=\"_blank\">Read the full&nbsp;January&nbsp;2017<br \/>\n<em>Investment Strategy Quarterly.<\/em><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<p class=\"disclaimer\">*An affiliate of Raymond James &amp; Associates and Raymond James Financial Services.<\/p>\n<p><em>All expressions of opinion reflect the judgment of Raymond James and are subject to change. Past performance may not be indicative of future results. There is no assurance the trends mentioned will con\u00adtinue or that the forecasts discussed will be realized. Investing involves risks, including the possible loss of capital. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.<\/em><\/p>\n<p><em>Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. Alternative investment strategies involve greater risks and are only appropriate for the most sophisticated, knowledgeable and wealthiest of investors. You should only invest in managed futures if you do not require a liquid investment and can bear the risk of substantial losses.<\/em><\/p>\n<p><em>While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, or state or local taxes. Profits and losses on federally tax-exempt bonds may be subject to capital gains tax treatment. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Asset allocation does not ensure a profit nor protect against loss. Beta compares volatility of a security with an index, such as the S&amp;P 500.<\/em><\/p>\n<p><em>Real Estate Investment Trusts (REITs) involve risks such as refinancing, economic conditions in the real estate industry, changes in property values and dependency on real estate management. Investing in smaller, newer companies generally involves greater risks than investing in larger, more established companies, and may not be appropriate for every investor.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Clarksville, TN &#8211; Each quarter, the Raymond James Investment Strategy Committee completes a detailed survey sharing their views on the investment environment, and their responses are the basis for a discussion of key themes and investment implications covered in this quarter\u2019s Investment Strategy Quarterly. Read an overview of the key themes below, or download the [&hellip;]<\/p>\n","protected":false},"author":23,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[5],"tags":[3672,825,514,792,10712,9793,11584,29672,18084,29673,3065,507],"class_list":["post-23724","post","type-post","status-publish","format-standard","hentry","category-community","tag-china","tag-clarksville-tn","tag-economy","tag-energy","tag-euro","tag-europe","tag-fm-bank-investment-services","tag-investment","tag-oil","tag-opec","tag-raymond-james-investment-services","tag-real-estate"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p4xGYI-6aE","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/posts\/23724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/comments?post=23724"}],"version-history":[{"count":1,"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/posts\/23724\/revisions"}],"predecessor-version":[{"id":23725,"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/posts\/23724\/revisions\/23725"}],"wp:attachment":[{"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/media?parent=23724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/categories?post=23724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.discoverclarksville.com\/articles\/wp-json\/wp\/v2\/tags?post=23724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}