Economic data around the world has been surprisingly strong. This seems to indicate a building momentum that could potentially drive corporate sales growth in the US and abroad. Synchronized global economic expansion has been tough to find since the financial crisis. A global composite of purchasing manager’s surveys reached a nearly six-year high in February, providing a seemingly solid base of economic activity. The earnings recession has ended and many analysts’ expectations are for relatively robust growth over the next couple of years. Following the November 2016 election, Financials rallied on the potential for regulatory relief and a steepening yield curve, which has the potential to drive profitability for companies in the sector. The sector eased in the first quarter as investors came to grips with the challenges of the legislative process. After outpacing broad market averages in the fourth quarter of 2016, the Financial Services sector lagged during the first quarter of 2017. Capital Markets was the best performing industry within Financials, followed by Insurance. The Portfolio was neutrally weighted in both groups. An overweight to Regional Banks, the worst performing group in Financials, accounted for the bulk of the Portfolio’s relative underperformance during the quarter, though stock selection among Regional Banks was favorable.
Information contained herein was obtained from recognized statistical services and other sources believed to be reliable and we therefore cannot make any representation as to its completeness or accuracy. Any statements not of a factual nature constitute opinions which are subject to change without notice.
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