Hall Sumner, portfolio manager at Wells Fargo Advisors in Beaufort, was recently published in Investor’s Business Daily. His opinion was featured in an article titled, “Asset Managers’ Midyear Market Outlook by Trang Ho. Investor’s Business Daily asked, “With practically half of 2011 in the rearview mirror, what’s in store for the market and where should you invest your money?” This is what Hal said:
“Have we been here before? Think back to last June, fears of inflation, sovereign-debt defaults and slowing global growth resulted in a correction in global markets. The correction proved to be short-lived and the markets recovered by early fall.
Data suggest that the domestic economy has clearly slowed. The question is if this is just a soft patch or the beginning of something worse. Our forecast for GDP annual growth is 3%, fueled by modest consumer spending and business investment, and we recognize that the risk is to a lower number, especially if oil prices bounce up again.
I manage ETF portfolios utilizing relative strength. Despite the pullback in equities and commodities, my work suggests that the two strongest asset classes are still U.S. equities and commodities. International equities, particularly emerging markets, are a close third.
While it certainly feels a lot like last summer, the indicators I follow are telling a much different story. We are slowly recovering from the worst recession in generations, and the U.S. is following the lead of stronger growth in Asia. Consequently, the economic and market outlook depends more on foreign developments than it has in previous cycles.
Moderating commodity prices should take some pressure off emerging market central banks that have been raising rates to cool their economies and head off inflation. Unless the data get much worse from here, I am looking to take advantage of the summer doldrums and position my clients for a better second half of the year.”