This week has several key market-moving events, including the European Central Bank (ECB) meeting, potentially impactful dialog coming out of the World Economic Forum in Davos and key economic data in the both the U.S. and around the globe. However, the swearing in of the new administration on Friday and the changes that will be made in Washington trumps all of them (pun intended).
Recent comments by Theresa May about Brexit pushed the pound below 1.20 to the dollar for the first time since October, and Donald Trump commented Brexit would be a success leading to more countries leaving the European Union. The markets will be on edge amid more uncertainty. I believe the markets have priced in a lot of positive expectations for the new administration, including tax reduction/reform and reduced regulatory burdens. However, the potentially changing landscape for globalization, in my opinion, has not been priced in to markets. The uncertainty that comes from changing the playing field across the world should not be underestimated. In the long term, it may all be a positive, but the journey will have significant winners and loser and keep markets on edge.
I continue to expect the coming months to be bumpy for both stocks and bonds. I remain cautious about asset prices in this period of uncertainty.
This blog post is for informational use only. The views expressed are those of the author(s), and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client. Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.
High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.