Insight & Commentaries

2018 Viewpoint

Our 2018 Viewpoint begins on an optimistic note. Growth continues to pick up by most accounts, businesses are again investing, and asset values are near records. Confidence necessary for risk taking is apparent, and inflation remains at bay. On the other hand, we are now confronted with higher valuations in many asset classes, which we feel should eventually weigh on long-run returns. This annual Viewpoint, along with quarterly updates, provides an organized way of looking at the economy, financial markets, and your portfolio. Full Report Click Here

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2017 Fourth Quarter Tactical Asset Allocation Report

We prepare to end 2017 with consumer and investor confidence running high, but we are mindful of potential longer-term speed bumps. Portfolios are neutrally weighted between stocks and bonds as we enter the fourth quarter. Full Text Here

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The Case for Rising Dividends

We believe companies with a history of increasing dividends provide a good starting place in a search for fundamentally strong and growing companies. Importantly, steady dividend growth often follows consistent profitability and shareholder-focused management. A dividend growth perspective looks beyond today’s yield and considers other factors, such as quality, growth, risk, and value. A track record of dividend increases can be viewed as a tangible signal by a company’s management that they are both willing and able to boost a payment to shareholders. This commitment suggests quality fundamentals currently and an expectation of continued improvement into the future. Full Text

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2017 Viewpoint

EXECUTIVE SUMMARY There are signs that growth is improving as we start the new year. The pickup began last spring, continued through the fall, and accelerated into year’s end. The surprise outcome of the election raised expectations for new tax, spending, and regulatory proposals, which could impact growth and business sentiment. The bond market is also taking notice of a changing landscape as interest rates price in some additional inflation. We start the year with a tactical tilt toward domestic equities and away from longer-term bonds. A portfolio strategy that combines a long-run point of view with some short-term flexibility…

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Monday Morning Minute

WASHINGTON CROSSING ADVISORS THE WEEK AHEAD A relatively quiet week for economic data, but new records on the Dow and S&P 500 have us thinking again about the “big picture.” MACROECONOMIC INSIGHT With the Dow just surpassing 25,000 and the S&P 500 crossing 2,700 for the first time in history last week, we thought it makes sense to pause and take a step back. As we point out in our Viewpoint 2018, we see the growing economy as the key driver of the market’s record-breaking performance, and there is clear evidence that growth continues. However, we must also point out…

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Monday Morning Minute 010218

MACROECONOMIC INSIGHT We begin 2018 on a positive note. Last week’s Chicago PMI posted its third straight plus 60 score and is on the best streak for the index in over three years. We expect similar positive results this week from the various manufacturing reports released. The theme of these reports is positive economic growth. After hovering around 2% for 2016 and into last year, GDP has topped 3% each of the last two quarters. We expect that this week’s data on manufacturing will point to an economy still enjoying a cyclical upswing.  Macroeconomic Advisers and the Atlanta Fed’s GDPNow…

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Monday Morning Minute 122617

THE WEEK AHEAD Happy Holidays from all of us at Washington Crossing Advisors and Happy New Year! MACROECONOMIC INSIGHT We first learned about the President’s tax plan a year ago. At that time, we had few details on which to base a forecast. Still, we anticipated that the plan could give a boost to the economy, especially through encouraging investment. The bipartisan Tax Foundation also looked at the early proposal and initially added roughly 0.75% to their baseline growth expectation. We raised our own long-run forecast by 0.25%. With the bill fully fleshed out, the Tax Foundation has come in…

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Monday Morning Minute 121817

THE WEEK AHEAD A busy week of negotiations and analysis of tax policy this week, ahead of the Christmas holiday.   MACROECONOMIC INSIGHT Congress will not be avoiding the Christmas rush this year, and a vote on a compromise bill is expected this week. A cut in the corporate tax to 21 percent from 35 percent is significant, and improves the after-tax earnings outlook. A reduced top individual income-tax rate, to 37 percent from 39.6 percent, should bolster private demand and savings. Progress on the tax front is important given the nearly $5 trillion increase in U.S. market value this…

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Monday Morning Minute 121117

THE WEEK AHEAD Janet Yellen leads her final Federal Open Market Committee meeting of 2017 and will hold her final Press Conference as Chair on Wednesday.   MACROECONOMIC INSIGHT With Jerome Powell set to take the reins of the Federal Reserve (Fed) from Janet Yellen next year, we wanted to analyze Chair Yellen’s economic legacy and give an assessment of the economy that Mr. Powell will inherit.   Labor Market   Last Friday’s November Employment report showed that 228,000 jobs were added during the month and the unemployment rate, at 4.1%, has fallen to its lowest level since the early…

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Monday Morning Minute 112017

THE WEEK AHEAD A Thanksgiving holiday-shortened week this week will see reports relating to business investment and minutes from the Federal Reserve Open Market Committee Oct 31-Nov 1 policy meeting. MACROECONOMIC INSIGHT Even though markets are pricing in good outcomes, risk assets can continue to perform well because monetary and fiscal policy remain supportive of growth and data reaffirms our conviction that the economy is on an expansion path. Valuations Full The value of U.S. equities is now over $28 trillion. At 145% of gross domestic product, this would suggest valuations are full.  Since 2004, the market value averaged about…

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Monday Morning Minute 111317

THE WEEK AHEAD Producer, Consumer, Import, and Export prices are in focus this week as we recap third-quarter earnings and look down the road towards future earnings seasons. MACROECONOMIC INSIGHT According to FactSet, for the third quarter, companies have reported earnings growth of 5.9% and sales growth of 5.8%. In addition to these impressive gains, more companies are beating earnings per share and revenue estimates than average. For example: Of the companies that have reported, 74% have reported EPS above the mean EPS estimate. That 74% figure is above both the 1-year (71%) and 5-year average (69%). At the sector…

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Monday Morning Minute 103017

THE WEEK AHEAD A busy week ahead including a Federal Open Market Committee (FOMC) meeting, announcement on a selection for next Federal Reserve (Fed) Chair, possible release of some details for the tax plan, and a look at the September employment situation. MACROECONOMIC INSIGHT President Trump is said to be leaning toward naming current Fed governor Jay Powell as the next Fed chair. The President has previously indicated he will make his decision before he leaves on his next foreign trip next week. Friday’s employment report is expected to show the economy added 308,000 jobs in October and the unemployment…

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Monday Morning Minute 102317

THE WEEK AHEAD While markets are speculating about Federal Reserve appointments and handicapping tax reform, the earnings season kicks into high gear. MACROECONOMIC INSIGHT The earnings season kicks into high gear this week as markets remain focused on happenings in Washington. Roughly 40% of S&P 500 companies are set to report third quarter earnings this week and expectations are high. Strong economic performance, despite hurricane impacts, underlie optimistic analyst forecasts for corporate earnings. For the full year, 2017 S&P 500 operating earnings are expected to increase 9% from 2016, and high growth is reflected in above average valuations. The S&P…

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Monday Morning Minute 100917

THE WEEK AHEAD We update our input tables to our long-run forecast and tactical top-down investment process. MACROECONOMIC INSIGHT Each quarter, we update a series of tables that lie behind our long run tactical asset allocation decisions. These are all forward-looking assumptions and are inherently imperfect estimates of the future. Still, these base-case assumptions are necessary and important inputs that form the basis for our top down investment process. The ratcheting down of our WCA Fundamental Conditions Barometer (currently near 50 vs. 75 at the start of the year), faster than expected rate increases, stubbornly low inflation, improving overseas trends,…

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