The Long View
The positive economic momentum that lifted equities over the past year should continue into 2018, with higher interest rates and inflation posing the biggest risks, notes ClearBridge Investment Strategist Jeff Schulze.
Positioning portfolios to anticipate potential shifts in market leadership is a key way active equity managers add value -- and one that's especially relevant in non-U.S. markets.
The view from ClearBridge
A pickup in merger and acquisition activity, higher oil prices and changes in leadership resulting from shifts in interest rates could unlock new opportunities for active equity managers in 2018.
After multi-year gains in the stock market, investors are looking beyond easy money for signs of continued momentum.
Health care stocks
Biotech companies represent a potential driver of above-average long-term earnings growth, yet current valuations appear to assign little value to the rich research and development pipelines in many firms in this industry.
Chart of the Week
Source: Bloomberg and Legg Mason, Jan 18, 2018. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.
Chart of the Week
For unemployment claims, the devil was in the details; Global oil looked to offer its own cure for high crude prices; China growth beat expectations
Changes in the tax code that reward capital expenditures and the repatriation of profits held abroad should boost U.S. GDP as well as corporate productivity.
A pick-up in mergers and acquisitions activity in undervalued parts of the US equity market could start a transition away from mega cap technology and Internet names being the biggest drivers of performance and momentum.
Strategies that embrace environmental, social and governance (ESG) principles are attracting more and more attention and assets -- a trend that's likely to expand going forward.
The global economy has been firing on all cylinders, stocks have soared, and recessionary risks remain minimal. But could the Fed's plans to shrink its balance sheet spoil the party?
Though severe enough to impact earnings, the flooding in Texas is unlikely to hurt property & casualty insurers badly enough to force rates higher.
No longer simply a niche strategy, ESG is evolving into a fundamental tool that can help active managers identify long-term value.
There's growing evidence that companies who integrate societal concerns about the workplace, environment and corporate governance into their operations may have a competitive advantage and improved growth potential.
Opportunity outside the U.S.
After a decade out of favor, international value stocks are overdue for a comeback, notes ClearBridge PM Safa Muhtaseb, thanks in part to better prospects for cyclical sectors in Europe.
Corporate earnings growth, an expanding economy and ample liquidity remain supportive of the current bull market. Earnings and economic growth, more than potential fiscal and tax policy, have been the catalysts for higher stock prices.
High quality companies remain an attractive investment opportunity despite more moderate growth expectations.
Regulatory delays for pipeline development are easing and drilling activity is increasing, which could have positive implications for MLPs in the energy sector.
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