Writing in a satirical journal in 1849, Jean-Baptiste Alphonse Karr penned the now famous epigram plus ça change, plus c'est la même chose (the more it changes, the more it is the same thing). One hundred and sixty-seven years later, I think this is an apt description of the markets in the first quarter of 2016.
The New Year saw steep drops in most major markets around the world. Volatility in China, falling oil prices, renewed talk of recession, stumbling manufacturing and lackluster corporate earnings were behind the selloff. At one point the S&P 500 was down 11% for the year. By mid-February however, markets began to turn upwards as China stabilized, the price of oil rebounded, and recession talk faded. The S&P 500 recovered its losses and finished just slightly positive at the quarter's end; the more it changes, the more it stays the same!
Looking forward, I am closely watching for changes in employment, inflation, corporate earnings and interest rates. Front and center on the international stage are oil production levels, a potential British exit or "Brexit" from the EU, and (still) the Chinese economy. With these issues in the spotlight, it is likely that this quarter will once again be volatile but I am optimistic for the U.S. markets in the longer term and will look to deploy capital into any near term weakness.
On another note, we are working on a number of interesting projects here at Russell Capital. In particular we have developed a new portfolio for socially responsible investing, called the Social Impact Portfolio. This portfolio seeks to maintain market returns while focusing on an investor's values, goals, and beliefs. I am keenly aware this is not an area of interest for everyone, but if you want to hear more please don't hesitate to contact me at [email protected].com, or 859.254.5225.