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Markets Strong Everywhere: First quarter was a strong one for stocks everywhere. US was up 6%, but many markets elsewhere (Germany, Japan, France) were up more (7%-8%). Emerging markets were up 11%, almost doubling US.
|Asset Class||Q1 Return||1-Yr Return||P/E Ratio|
|Emerging Market Stocks||11.45%||17.22%||14.5x|
|US Real Estate Stocks||3.22%||5.58%||27.1x|
|US Small Company Stocks||2.47%||26.22%||22.0x|
|Global Intermediate Bonds||2.16%||-2.58%||-|
|Global 3-5 Year Bonds||1.82%||-1.20%||-|
|US 1-3 Year Treasuries||0.27%||0.24%||-|
Maybe Not Really a Trump Bump: This leads me to believe the "Trump Bump" in the US wasn't really a "Trump Bump" at all, but just reflective of strong sentiment and data around the globe, including lessening worry about France's election and the UK's upcoming Brexit. Politics usually aren't the big drivers in market returns.
Trump Results Maybe More Status Quo Than Anyone Might Have Guessed: Given early challenges and setbacks, the Trump administration may have trouble getting its agenda moved forward, possibly resulting in a very non-status quo president getting very status quo results. Time will tell.
Market Valuations Relatively High: Market valuations continue to be on the high side by historic norms: US at 21x-22x earnings; Europe at 20x; Pacific region at 15x, and Emerging Markets pretty cheap at 14x.
Bonds flat (but stable on the short/intermediate spectrum), and nothing new here. Fed raised overnight rate a quarter point again, but rates aren't likely to be the big driver over time of equity returns, and while rising rates may hurt bonds returns in the very short term, probably won't in the longer term as old lower yielding issues roll over into new higher yielding ones.
Guaranteed Issue Coverage via ObamaCare Still There for Early Retirees: Obamacare (ACA) repeal didn't happen. Very complicated issue, with lots of moving parts and constituencies. Regardless of how you feel about the ACA (ObamaCare) vs the proposed ACHA (TrumpCare), this non-repeal is a good thing for a lot of early, pre-age-65 retirees, many of whom need, but wouldn't be able to get, insurance and therefore end up working just for insurance coverage.
Fiduciary Rule on Hold for 60 Days: DOL fiduciary rule (i.e., legal requirement to put clients' interest first) for IRAs and work-place retirement plans delayed until June 9th. Maybe a pre-cursor to watering down the rule or outright repeal. I hope not: there are a lot of investors getting scammed. Regardless of outcome: My firm, Retirement Planning Specialists, and I are - and will continue to be - full fiduciaries with respect to all clients and accounts and that won't change with or without the DOL rule.
Negative News Bias: It's definitely out there depending on which channel you're watching or paper you're reading but the real, mostly unmentioned news bias, is not liberal/conservative; it's negative! (Suggested book: Bias by CBS' Bernie Goldberg). Sunshine and safe travel don't sell newspapers; hurricanes and plane crashes do. Try to be aware of this and not let the short term, negatively-biased news upset your well-thought out, long-term portfolio.
News and politics notwithstanding, I hope you are enjoying Spring, which came early this year and looks to stay, and as always, please let me know if there is anything we can do for you.
 Indices used from top to bottom of list, all denominated in USD: MSCI Emerging Markets, S&P GSCI Gold, MSCI All Country World Index ex-US, MSCI Europe, MSCI Pacific, S&P 500, Dow Jones Real Estate, Russell 2000, Barclay's Global Bond Aggregate, Barclay's Global Aggregate Bond 1-3 (or 3-5) Years, SBBI Inflation, Barclays US Treasury 1-3 Year, and the S&P Goldman Sachs Commodity Index
 "We got the bubble-headed-bleach-blond Who comes on at five / She can tell you 'bout the plane crash with a gleam in her eye / It's interesting when people die / Give us dirty laundry" (Don Henley, Dirty Laundry, Building the Perfect Beast, 1982). Here's a link to the song on Youtube