ECONOMIC REVIEW AND OUTLOOK -

The start of 2019 is a stark contrast to the beginning of 2018. Optimism ruled the day last year, as the S&P 500 closed with a 6.6% return in the fourth quarter and the bond market behaved in orderly fashion. Global economic growth was synchronized and set to accelerate its pace. The tax reform bill passed by the U.S. Congress was going to increase corporate capital expenditures and the individual tax cuts would trickle down, acting as a multiplier to growth.

2019 begins with concerns seemingly mounting—weaker than-expected global economic data; uncertainty regarding the outcome of trade talks between the United States and China; the impact higher interest rates will have on corporate earnings, consumer spending and housing; how fast the European and Japanese economies are slowing; and whether the dollar will keep rising or reverse course and weaken like last year, among others. Although there are plenty of headlines to grab our attention, we are focusing our efforts on deciphering the noise from the signals. There seems to be more uncertainty in the capital markets than in recent years, and as a result we forecast outcomes to be prepared, which allows us to adjust better to unforeseen events.