See all our latest ISO updates below.

2017 Mid-Year ISO: The Tortoise and the Hare Cycle

As the cycle advances we still believe a 'grind it out' atmosphere prevails with both longer-dated yields and equity prices grinding higher.
Christopher Hyzy
Chief Investment Officer, U.S. Trust

As we close out the first half of 2017, global equity markets are hovering around record highs, long-term bond yields have been stuck in a low range, the dollar is currently stable to slightly weaker than expected, inflation is now below the target rate, asset price volatility has been tame, geopolitical risk is still elevated at this time and economic growth is following a traditional late-cycle pattern by trending upward from its mid-cycle slowdown.

The initial move up in risk assets was dominated by a solid profits cycle powered by the resurgence of Emerging Markets growth and the end of their bear markets. The global profit cycle benefits from a stable if not slightly weaker dollar, benign financial conditions and strong business and consumer confidence (a goldilocks environment that is not too hot and not too cold). We don't see this dynamic changing in the second half of the year. We expect risk assets to maintain their uptrend in Q3 and Q4 as the global synchronized economic expansion could continue.

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March 2017 ISO: Too Much Growling and Howling

Buffaloes Stampede Bears
We still anticipate better-than-expected earnings growth, even without additional stimulus in 2017.
Christopher Hyzy
Chief Investment Officer, U.S. Trust

Can you hear the bears growl? Have you heard the wolves howl? Both have recently drowned out the subtle grunts of the bulls or—as we have been known to call their less attractive family members—the buffaloes.

The latest, overly short-term, investment headlines have centered on the potential start to a 5% or more correction. Many are discussing the notions that the so-called Trump rally is over, equity valuations are too rich, and the "reflation trade" and bank stocks have had their day in the sun, given that long-term yields have exhaled recently.

In our opinion, this is more of a pause than a wholesale switch in positioning. We don't think it makes sense to get caught up in the daily headlines and noise that populate the airwaves and can be disproportionately based on pure speculation rather than on sound, specific analysis.

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2017 Year Ahead: A World Of Change

The Investor Strikes Back!
We expect business, consumer and investor confidence to continue to head higher well into 2017 (with most of the newly expected growth to come in 2018), which should underpin equities for most of the year
Christopher Hyzy
Chief Investment Officer, U.S. Trust

Looking back over the years at some of the Year Ahead thoughts they ranged from the Year of Deleveraging in 2008, Crossing The Rubicon in 2010, Where the Buffalo Roam in 2015 and in early last December when we published the Year Ahead for 2016 we envisioned a "grind it out year" that had the potential to produce 7-8% returns (before dividends) in US equities and contain more episodic volatility versus a consistently elevated level. We called 2016 The Twilight Zone: A new dimension brings new complexities, but economic growth and equities should edge higher. As we close out the year it may appear that we did indeed experience "The Twilight Zone" with a strange end to this year at or close to all-time highs on the major indices.

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