We continue to believe that we are in the middle innings (5th or 6th inning) of an equity bull market in the US, and we do not currently see the next bear market on the horizon. Equity valuations remain “fair” according to our Price Matters discipline, and global accommodation has raised the likelihood that the current bull market could go into extended innings. We are also encouraged by the fact that earnings expectations for US companies have been significantly reduced recently as analysts have quickly incorporated worst-case scenarios for crude oil and currencies into their financial models. We expect that these rushed estimate reductions will prove overly pessimistic and too one-sided in nature, failing to consider the many positive economic implications of cheap gasoline and a strong dollar.
Wit that macro outlook in mind, we wanted to highlight some of the changes we have been making recently in the domestic equity portion of the RiverFront portfolios.
Here is The Weekly View.
If the Fed intervened, commencing on March 13th, as I have been saying, then the US Dollar Index headwind has certainly been checked. Moreover, it could easily range sideways to somewhat lower for a considerable time. If so, that will help the price of WTI crude oil move a little higher, as it is priced in US Dollars. These two factors would lend support to the optimistic view from RiverFront.
Over the longer term, I maintain that the US Dollar will move higher in a likely secular uptrend led by the USA’s technology lead and near energy independence.Back to top