Winthrop Capital Management

Coming into 2022, our base case for the economy was that the Fed would begin to unwind its easy money policies, raise short term interest rates, and try to reduce the size of its bond portfolio. The assumption was that economic growth would begin to slow and the narrative from the Fed would help to […]

Economy Monetary policy in the first half of this year stands in stark contrast to the past 15 years and investors are navigating capital markets that no longer have government support. The cumulative budget deficits, trade tariffs, supply chain disruptions and rapid money growth have pushed the rate of inflation to 9.1% measured by the […]

The investment environment has changed dramatically from six months ago. After the S&P 500 peaked on December 26th , 2021 at 4766, we are now navigating a much different market environment with higher turbulence. The economy is showing signs of slowing, the Federal Reserve is intent on raising short term interest rates to combat accelerating inflation, […]

Macro View Our concerns of a slowing economy were laid bare over the past two weeks as the Commerce Department reported a decline in Gross Domestic Product of -0.4% for the first quarter of 2022. This was the first decline since the early days of the pandemic, and a reversal of the 1.7% growth seen […]

Macro View The factors that investors evaluate to determine valuation and risk have changed dramatically over the past five months, which has shifted expect returns lower. Here is a summary of the changes in the factors investors are evaluating: The global economy is slowing instead of expanding as initially thought. The spread of the Delta […]

This was supposed to be the year of economic recovery after a two-year pandemic nearly destroyed the global economy. However, the International Monetary Fund (IMF) recently reduced its growth forecast for the world economy. According to its latest World Economic Outlook, published in January, the IMF now expects global gross domestic product to grow 4.4% […]

Macro View The war in Ukraine is contributing to a global slowdown in economic growth and dominating the focus of the capital markets. At the same time, the Federal Reserve is indicating plans to remove monetary stimulus from the capital markets and begin to raise short-term interest rates this week by 25 bps. Here is […]

Macro View The Russian invasion of Ukraine last week has disrupted global capital markets. In the United States, the S&P 500 dropped -5.25% only to finish the week where it began at 4385. In the absence of the aggressive monetary and fiscal stimulus investors have been accustomed to following the Financial Crisis and through the […]

Since the beginning of the year, the S&P 500 is down by -8.76% and the yield on the 10-year U.S. Treasury has increased by 30 basis points to yield 1.93%, after touching 2.00% earlier in the week. Last year, valuations of domestic equities, measured by the S&P 500, had touched their second highest level at […]

For a generation of investors and Wall Street Traders, they have not experienced the pace of inflation we are navigating today. The January Consumer Prices Index of 0.6% released last week puts the annual rate near 7.5%, which is the largest increase in the rate of inflation in 40 years. But this time it's different. […]

Macro View We have competing agendas: the Fed is trying to curtail the impact of rising inflation and provide confidence to the market that it knows what it's doing.  Meanwhile the economy is showing signs of surging as the Omicron variant declines, workers are getting back to work and more of the economy is opening […]

Monetary Policy The Federal Reserve announced a more aggressive switch to its accommodative monetary policy this past week. In doing so, the Fed is acknowledging inflation is more persistent than it had previously hoped or believed. During the Financial Crisis of 2008, the economy lost over eight million jobs, and it took nearly three years […]

Risks to the Market Market volatility is spiking. Volatility, measured by the VIX, is approaching levels similar to last January, when the market was navigating the GameStop news. The increase in volatility is a reflection of investor sentiment expressed through an increase in buying of put options, a method of portfolio protection. With equity valuations […]

Risks to the Market We have quickly become accustomed to new vocabulary words, such as “double vaxxed” and “Covid variant.” The global pandemic continues to shape the capital markets, global economic growth and how investors view risk. A market is a clearinghouse for the price of risk. Markets have a way of digesting risks and […]

With the rate inflation running over 5%, will the Federal Reserve keep interest rates low? In our opinion, the answer is no, they will not. Since the Financial Crisis, the Fed has longed desired a scenario of economic growth accelerating above 2.5% and inflation tipping over 2%. Now, with inflation running at a solid 5% […]

The Labor Force Participation Rate is Stuck During the early weeks of the pandemic, nearly 8 million employees lost their jobs as companies closed down. Through the last year and a half of the pandemic and the reopening of the economy, over 4 million jobs have been created, and the unemployment rate has dropped to […]

The Economy The acceleration in the rate of Inflation is real. According to the Bureau of Labor Statistics, wages in the United States increased 4.6% annually in the third quarter of 2021, measured by the Employment Cost Index. We expect wage pressure to continue into the end of the year as companies look to expand […]

Last week, interest rates moved higher, stocks moved higher and earnings moved higher. The headline this past week read, “Budget Deficit Declines from Prior Year.” However, the real story is more sobering. After a record budget deficit in 2020 of $3.2 trillion, we incurred the second highest budget deficit of $2.8 trillion this past fiscal […]

Through the pandemic, demand has remained strong while supply has been disrupted. We are seeing supply chain disruptions in raw materials, manufacturing, single family homes, and the labor market. Amidst a shortage of workers, we are seeing the power shift in the labor market from employers to the employees. Last week, nearly 10,000 members of […]

So far this year, the performance of Chinese equities is down -40% after the government had initiated a wave of antitrust and regulatory actions and taken steps to reign in its technology companies. Any investor that has been active in the global financial markets over the past 30 years should not be surprised by the […]

The Economy As we approach the end of the third quarter, we are stepping back to look at a few primary variables in the economy and investment markets. We have prioritized and outlined our thoughts and investment initiatives. The Delta Variant – In spite of the re-opening, economic growth is slowing. The spread of the […]

The current period feels like we are in the proverbial “calm before the storm.” The markets are quiet at elevated valuations, trading in a tight range. Bond yields are trending lower. The economic recovery appears to be running out of gas. Congress is trying to address the next round of fiscal stimulus wrapped up in […]

Just as the economy should be accelerating, it is beginning to show signs of slowing. The Covid-19 variant is hitting the U.S. and, combined with supply chain disruptions and labor market dislocation, is hampering efforts to re-open. The momentum in economic growth is petering out, resulting in several negative effects Third quarter earnings growth will […]

Top Five Stock Picks With the S&P 500 trading near 39 times earnings, equity valuations are extended. This makes it more difficult for investors to identify stocks that have the potential to post the growth rates we have seen over the past four years. Here are our top five stock ideas as we head into […]

We are half way through the quarter and likely heading into a difficult period for investors. Here's why. 1. The Covid-19 Pandemic Continues The US economy is still recovering from the impairment caused by the pandemic. First quarter GDP increased 6.3%, while second quarter GDP increased 6.5%. While the recovery is slower than anticipated, the […]

Fifty years ago, on August 15, 1971, President Nixon announced the suspension of the dollar's convertibility into gold at the fixed rate of $35 per ounce. Up until that point, anyone owning a U.S. dollar had the right to exchange the currency for a fractional share of gold at a fixed rate. While the fractional […]

The economy surged at a 6.5% annual rate in the second quarter according to the Commerce Department. Gross Domestic Product now exceeds its pre-pandemic level, and much of the economy is still hibernating, which should provide a catalyst for a further surge heading into the end of the year. The potential for a surge includes […]

Economy During the second quarter, we expect the U.S. economy likely recovered completely the output lost during the pandemic. Prior to the onslaught of COVID-19, total real GDP was roughly $19.2 trillion. The impact of the pandemic forced GDP to fall to $17.3 trillion, a decline of nearly -10%. However, following 1Q 2021 GDP growth […]

The Economy We believe there is a disconnect between economic activity, the equity market, the bond market and what to expect in the future. The economy is strong. GDP grew at 6.4% in the first quarter of 2021. Whether growth has peaked or not is irrelevant, we expect a strong follow through into the third […]

The domestic economy continues to show strong growth with the U.S. Bureau of Economic Analysis posting first-quarter GDP growth of 6.4%. This reflects the continued recovery throughout the economy and the reopening of restaurants and entertainment following the pandemic. The strength of the recovery continues to be supported by the government's response, through both fiscal […]

The Economy The domestic economy continues to show strong growth with the Bureau of Economic Analysis posting first quarter GDP growth of 6.4%. This reflects the continued recovery throughout the economy and the reopening of restaurants and entertainment following the pandemic. The strength of the recovery continues to be supported by the government's response, both […]

Portfolio Model Rebalancing Strategies Core Sector In our Core Sector model series, we place sector bets by overweighting in ETFs that correspond to sectors of the S&P that we believe will outperform over a period. In the second quarter, we were overweight in healthcare, technology, and communication services. Technology – Demand for the Tech sector […]

Our base case investment view is that the vaccine will be successful in controlling the spread of the COVID 19 virus which will help support the reopening of the economy. This in turn, will help put people back to work supporting an improvement in the labor market to the point that we actually experience wage […]

Chief Investment Officer and President, Greg Hahn, sits down with Portfolio Manager, Adam Coons for another episode of Winthrop’s “Weekly Insights” podcast. Tune in as they discuss our outlook for the markets as the Fed shifts fiscal policy and the economy continues to reopen to full capacity in the second half of the year. Greg […]

Before this year's end, we expect the Federal Reserve will begin to shift away from the aggressive monetary policy that has provided support to the capital markets since the start of the pandemic in March last year. With the increase in vaccinations and more of the economy reopening, we expect GDP growth to accelerate over […]

The Economy Our base case for the economy remains that the vaccine will be effective in controlling the spread of COVID-19, which will clear a path for the economy to reopen and economic growth to rebound. The increase in demand will put pressure on inflation and wages as we expect a labor shortage in the […]

Last week, the Labor Department announced that only 266,000 jobs were added in the month of April, which was well below expectations of one million new jobs. Still, our base case outlook for economic growth is that the vaccine will prove successful at controlling the spread of the COVID-19 virus, and the economy will take […]

Our base case for the economy hasn't changed. We expect the vaccines will be effective at controlling the spread of the COVID-19 virus. We are at the intersection of the spread of the virus and the rollout of the vaccines, and the number of COVID-19 cases is declining. As the pandemic subsides, the economy will […]

Economy The U.S. economy showed signs of stabilization in the first part of 2021. Congress and the Fed are fueling the economy for a roaring comeback from the market downturn, and manufacturing is at its highest level since 2018. Widespread vaccine distribution is a promising sign for the reopening of several parts of the economy. […]

Economy The International Monetary Fund (IMF) expects the world economy to expand by 6% this year, the fastest pace of growth since 1980. The new projection is an increase from the prior projection of 5.5% that the IMF made at the start of the year, and the optimistic outlooks is lead largely by the surge […]

Investing is all about digging beyond the headlines in the financial press. When you peel back the layers of the capital markets, there is always more detail to uncover, either confirming your investment strategy or allowing you to shift tactically. Listen to this week’s episode as we acknowledge that the capital markets are very intertwined amidst recent […]

Our Equity Strategies Focused Growth Strategy: The Focused Growth portfolio is a concentration of Winthrop Capital’s top equity ideas across medium- and large-cap companies.  The portfolio invests in companies with above-average revenue and earnings growth, performance momentum, and a sustainable business model for the future. Our relative value discipline allows us to measure risk and […]

A year ago, we discussed on this podcast the spread of COVID-19 and how it was affecting the capital markets. March 16, 2020 was the worst one day sell-off in stock prices since 1987. The S&P was down -26% year-to-date, and bond yields declined to historic low levels. At the same time, volatility spiked to […]

More Money Saturday the Senate passed President Biden’s fiscal stimulus package designed to provide support for households and small businesses. The next step is to go back to the House on Tuesday for a final vote. Totaling an expected $1.9 trillion, this is the third stimulus package post- pandemic and comes on the heels of […]

The Economy In spite of Federal Reserve Chairman Powell’s assertion that the Fed would support ultra-easy monetary policy over the prolonged future, a sharp rise in interest rates persisted and markets displayed signs of stress last week as equities sold off. Fed Chairman Powell, in testimony last week before the Senate Banking Committee, reaffirmed the […]

The Economy Our base case economic outlook this year is that the vaccine is ultimately successful in controlling the spread of the COVID-19 virus. The intersection of the spread of COVID-19 and the vaccination will likely be late spring. With warmer weather and lower rates of infection, we expect an increase in the travel, leisure […]

The Economy The key issue that investors are focused on today is fiscal stimulus. What is the next tranche of fiscal stimulus, when will it come, and how large will the package be? President Biden has proposed a $1.9 billion fiscal stimulus plan, and Republicans have pushed back on the size of the plan over […]

The Economy We are currently living through a very unusual recession. For nearly an entire year, much of the U.S. economy has been shut down, and the government has responded by arming businesses and households with a war chest of cash to spend. The Commerce Department reported last week that the U.S. economy shrank by […]

Investment Strategy We believe we are in a transition period where industries that were impacted by COVID-19, such as retail, restaurants, travel and leisure, are performing better than the large cap tech companies that led the market last year. Last week, we saw a meaningful switch in performance leadership as Energy and Financials led the […]

Established Variables: This week marks the beginning of a new presidency with a new agenda. President-elect Joe Biden unveiled his $1.9 trillion stimulus plan last week, which will be in addition to the $900 billion plan passed by Congress in December. More fiscal stimulus is anticipated which will support small business and consumers for the […]

The Economy Just as we turn the corner from a year dominated by the pandemic, with hopes that normality might return in 2021, the stomach-wrenching riots in the Capitol last week swept the news. Roll up your sleeves, this year is likely going to get messy, and we don’t mean that just in a political […]