We believe it is clear that central bank rates will rise. Either all the money central banks printed, purchased, and manufactured went into the economy or it did not. Like most things, it is probably somewhere in between. Did the money inflate asset prices or just provide cheap money to buy assets with higher rates of return than borrowing costs? Common sense would tell us that so long as the rate of borrowing is below that of an investment return adjusted for risk, a rational investor would chose to invest. Our belief is that rates will rise slowly and therefore no huge selling pressure so long as confidence stays high and things become less uncertain. Increased short term volatility in the market is our industries collective guess as to asset prices due to current headlines, news, statements, and tweets. As asset allocators, CKW continues to overweight stocks vs bonds, take credit vs rate risk, and watch earnings. If the industry is right about earnings rising over 10% over the next year and PE’s stay the same, it would be reasonable for the market to be up 10%. So stay focused on earnings.
For more CKW portfolio information, go to Morningstar ETF Managed Portfolio Landscape, Envestnet, or Fidelity’s Separate Account Network.
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