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Global Earnings Power Higher

CaptureGlobal stock markets gained in value during the first half of 2017, and have performed especially well over the past twelve months. Just one year ago, markets were in the throes of “Brexit”. Today, things are looking up for the global economy.

In retrospect, Brexit marked an inflection point. At the time, the U.S was among the few bright spots on the global stage.

Now, many economies are performing well (see top chart). Foreign corporate earnings have followed suit, with international developed earnings up 22% over last year and emerging markets earnings up 29%. Share prices have moved up accordingly. This suggests that improved foreign market performance is rooted in fundamentals and has room to run.

Among the few asset classes to perform poorly in 2017 is oil, down 23%. Stocks struggled in early 2016 when oil dropped as investors feared a wave of energy company bankruptcies and turmoil among oil-exporting emerging markets. After a period of adjustment, however, lower oil prices are now aiding the global economy.

Despite this positive backdrop, valuations for U.S. equities remain above long-term averages, suggesting below-average returns in the coming years and above-average risk. Accordingly, we recommended that investors remain prudently diversified as a way to manage risk in portfolios.


About Hefren-Tillotson

Hefren-Tillotson Inc., is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN for individuals and businesses. The firms wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFSs. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills.


Disclosure: This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

Investment Advisory Team

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