While the U.S. market is not expensive, many foreign markets are more attractive than normal.
-Mark Luschini, chief investment strategist, Janney
ECONOMIC DATA CONCLUSION: The majority of ISM Non-Manufacturing survey participants were optimistic about the overall direction of the economy and business conditions. Unit labor costs are consistent with moderate inflation pressures. Hourly compensation averaged 1.7% in 2012. However, it fell 0.4% in real terms (inflation adjusted), reflecting continued slack in the labor market. In 2012, bankruptcies fell 13.3% to 1.221 million, the fewest in four years, reflecting the gradual improvement in the economic environment.
- Better 4Q profits than originally expected with companies providing cautious outlooks for the first half of the year
- U.S. Economic News – ISM Non-Manufacturing Index, bankruptcy filings and jobless claims reflect gradual economic improvement
- Global Market Conditions – he still favors international equities despite the recent move higher; Europe and Japan remain his favorites
- Mark still likes U.S. financials and expect the sector’s equity risk premium to fall as the economy and sector valuations improve