Our view of the market is nuanced.

The domestic economy has been strong, but it faces several headwinds and the stock market has struggled.

We don’t think most current investment analysis is right about the present environment and so we see and opportunity to capture some of the market’s inefficiencies.

Global equity markets have struggled although the US remains strong supported by strong earnings growth. Valuations are in the middle of their recent range and provide fair value. Emerging markets are especially showing weakness and the rest of the world continues to underperform. The dollar remains the world’s reserve currency and at these levels should stabilize.

Bond yields have moved lower around the world with US Treasuries yielding more than most other countries. Corporate credit has been solid despite and overall weak global economy. The Eurozone economy is weakening, structural issues are limiting China’s recovery, and declining commodity prices indicate weaker demand in trade.

Trade issues present challenges to the US economy. Employment has begun to slow; one side-effect of a tight labor market. Inflation has been depressed by demographics, technology, and cyclical weakness. The Fed remains on hold but has changed its mantra from “patient” to “flexible.” It is unlikely at this point that the Fed would raise rates.

Roman Emperor Marcus Aurelius is attributed as saying “The secret to victory is the organization of the non-obvious.” Financial barometers are showing weakness which is a sign of non-obvious market inefficiencies. Success in this environment means getting the odds on your side and executing a disciplined approach toward risk and opportunity.