Perspectives & Commentary

Avalon produces a variety of investment commentaries.

Our perspectives and quarterly commentary are issued throughout the year and cover a range of investment-related topics.

Monthly Note

August 2017

The U.S. and global economy remained strong during August. While U.S. employment and GDP growth showed stable to accelerating growth, there were the now normal caveats of low inflation and slow wage growth.

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Quarterly Note

First Quarter, 2017

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Quarterly Note

First Quarter, 2017

From the start, 2017 has been an intriguing year. With another rate hike under its belt, the Federal Reserve has accelerated from its previous tentative pace and has even begun to talk about removing some of the final vestiges of the Great Recession—the assets purchased during its quantitative easing programs.

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Monthly Note

January 2017

January was a month filled with change as the Trump Administration was inaugurated. Delivering on many campaign promises, President Trump’s first weeks in office were a whirlwind for investors. From immigration to regulation, the Administration was busy.

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Newest Avalon Perspectives:

TPP Is Dead. Now What?

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News | Press

December 16, 2016

Avalon Advisors, LLC is pleased to announce that a minority interest in its firm, previously held by select outside investors including The Carlyle Group, has been acquired by four private families and employees. As a result of the transaction, which closes this month, the majority interest in Avalon will be owned by its employees and local families.

 

Monthly Note

November 2016

The final quarter of the year began with minimal fanfare. Early in October, the employment report showed a mildly disappointing 156,000 jobs created in September. While the figure was lower than anticipated, workers continued to return to the labor force in droves with 440,000 coming back in the month alone.

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Monthly Note

August 2016

In August, US economic data was generally positive. At the beginning of the month, the strong July jobs report showed the US continued to generate employment, further negating May’s slow down. Yet US productivity is still lagging, and this places more pressure on employment gains to power US growth.

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Monthly Note

July 2016

After a weak May, the June jobs report showed the labor markets resiliency with strong internals as people returned to the labor force and received higher wages on a broad sector basis.  While creating 287,000 jobs is positive, it is likely that the trend will be closer to 150,000 as we progress through 2016.

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Monthly Note

May 2016

May was an interesting month, with US economic data firming and signs of stability in the global economy. While growth is not robust and the global economy is subject to significant risks including Brexit and tightening by the Federal Reserve, the global economy appears to have bounced back from a weak start to the year.

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News | Press

October 1, 2015

Global alternative asset manager The Carlyle Group completed the sale of a portion of its

equity interest in Avalon Advisors, LLC to The Cynosure Group, LLC. The investment in Avalon Advisors was made through Carlyle Global Financial Services Partners L.P., which will retain a material equity stake in Avalon Advisors following this

transaction.

 

Monthly Note

July 2017

July proved to be an intriguing month for markets. The U.S. dollar slid to levels not seen since early 2016¹ even as the Federal Reserve signaled its intention to begin shrinking its balance sheet “relatively soon”.

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Monthly Note

May 2017

Throughout May, U.S. economic data remained moderately encouraging. Manufacturing growth, employment and personal consumption indictors were generally positive while inflation remained tepid. The U.S. economy as a whole appears to be growing at a modest pace, accelerating from a weak first quarter.

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Monthly Note

April 2017

April proved to be a bit of a reality check for US economic indicators and data. US economic data disappointed relative to expectations following several months of surging expectations. The recent GDP report from the Bureau of Economic Analysis revealed that the first quarter of 2017 grew at only a 0.7% pace.

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Monthly Note

February 2017

In many ways, February was a month epitomizing the recent two-speed economy. Following the election, sentiment and survey measures surged, but the actual data trailed behind. Throughout February, the data remained in largely the same pattern.

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Quarterly Note

Fourth Quarter, 2016

Looking forward is always an interesting exercise, and 2017 does not disappoint on this front.

From President-elect Trump’s administration and its promise of less regulation, lower taxes, and more jobs to the implementation of the OPEC deal to cut oil supplies, the possibilities for interesting economic outcomes abound. Markets, both equity and bond, have already reacted to portions of the above possibilities.

News | Press

December 21, 2016

Avalon Advisors, LLC (“Avalon”) and Matterhorn Capital Management, LLC (“Matterhorn”) today announced their companies have entered into an agreement which will build upon and enhance their capabilities to meet the needs of clients in San Antonio and throughout the South Texas region.

 

Monthly Note

December 2016

The outlook for the US economy shifted following the election result. The market’s reaction was initially negative, but quickly reversed. Equities rose, interest rates moved higher, and the dollar strengthened as the GOP’s proposals surrounding prospects for fiscal spending and tax reform came into focus.

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Quarterly Note

Third Quarter, 2016

The US economy was not particularly inspiring in the third quarter, growing a mere 1.4%. Employment growth was strong, bouncing back from a weak second quarter (see Chart 1). Consumer spending drove second quarter GDP which will likely continue to be the case as business investment remains lackluster.

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Quarterly Note

Second Quarter, 2016

Brexit was certainly an unexpected development, and its consequences are likely to reverberate for the foreseeable future. Given the drawn out timeline for negotiating the departure, Brexit will keep the Federal Reserve from moving rates higher—at the very least, rate hikes are off the table in 2016.

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News | Press

April 11, 2016

Avalon Advisors, LLC is pleased to announce that Sam Rines has joined the firm as a Director, Senior Economist, and Portfolio Strategist. Mr. Rines comes to Avalon from Chilton Capital in Houston, where he was a Portfolio Manager and Economist, having spent five years authoring firm communications and managing equity portfolios.

 

Global Commentary

Fourth Quarter, 2015

2015 was a difficult year for equities. Global equity markets were down 1.88% in US dollars. A few markets like Japan (+9.92%) and the US NASDAQ (+7.1%) performed reasonably well. Emerging markets did poorly, down 14.87% with the notable exception of China.

 

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Avalon Perspectives

TPP Is Dead. What Now?

January 25, 2017

The Possibilities of Trump's U.S.

December 9, 2016

Reversal Rates Are the Next Big Challenge for Central Banks

November 23, 2016

The Good Ole Days Aren't Coming Back

October 13, 2016

The Federal Reserve's Anti-Volcker Inflation Revolt

August 24, 2016

Why the Fed Needs to Raise its Inflation Target

August 18, 2016

Is the Rest of the World Ditching America to Trade with China?

August 3, 2016

Has the Federal Reserve Become Congress's Golden Goose?

July 20, 2016

The Fed Must Avoid the 'Credibility Trap'

June 21, 2016

Why the Fed Needs to Make a Policy Error

May 18, 2016

The Fed Faces Its 'Anti-Volcker Moment'

May 9, 2016

The Fed's Critical Global Mandate

April 29, 2016

Why the Federal Reserve Is All Talk

April 26, 2016

Is the Global Middle Class Really Here to Stay?

April 12, 2016

Quarterly and Monthly Notes

Monthly Note

August 2017

Monthly Note

July 2017

Quarterly Note

Second Quarterly,  2017

Monthly Note

May 2017

Monthly Note

April 2017

Quarterly Note

First Quarter, 2017

Monthly Note

February 2017

Monthly Note

January 2017

Quarterly Note

Fourth Quarter, 2016

Monthly Note

December 2016

Monthly Note

November 2016

Quarterly Note

Third Quarter, 2016

Monthly Note

August 2016

Monthly Note

July 2016

Quarterly Note

Second Quarter, 2016

Monthly Note

May 2016

News | Press

Avalon Advisors Announces San Antonio Expansion

December 21, 2016

Avalon Advisors Announcement

December 16, 2016

Sam Rines

April 11, 2016

Avalon Advisors Announcement

October 1, 2015

Viewpoints

China

March 1, 2014

Commentary

Fourth Quarter, 2015

Second Quarter, 2015

First Quarter, 2015

Fourth Quarter, 2014

Third Quarter, 2014

Second Quarter, 2014

Global Commentary

Second Quarter, 2015

U.S. equities were little changed in the second quarter, with the S&P 500 Index and the Russell 2000 returning 0.3% and 0.4%, respectively. For the first half, the S&P 500 returned only 1.2%. Even with its recent meager performance, this index returned 120% for the five years ending June 30. Within the S&P, only 5 of the 10 sectors posted positive returns in the quarter.

 

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Global Commentary

Fourth Quarter, 2014

U.S. equity markets continued to rise in the fourth quarter on increasing evidence of a strengthening economy, with the S&P 500 Index returning 4.9%.

 

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Global Commentary

Third Quarter, 2014

U.S. equities outperformed international equities in the third quarter, with the S&P 500 returning 1.13% and the MSCI All Country World Index ex U.S. losing 5%.

 

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Global Commentary

First Quarter, 2015

Despite being down in both January (-3%) and March (-1.5%), the S&P 500 was slightly positive for the quarter as a result of a nearly 6% total return during February.  After significant under performance last year, small cap stocks did better than their large cap counterparts, with the Russell 2000 up 4.3%.

 

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Global Commentary

Second Quarter, 2014

US Equities continued to advance in the second quarter, with the S&P 500 returning 5.2% for the quarter and 7.1% for the first half. Energy was by far the best performing sector in the quarter, returning over 12%. Utilities and Technology stocks also performed well, while Financials and Consumer Discretionary stocks

lagged.

 

 

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China

March 1, 2014

Among emerging markets, China holds a particular place. It represents by itself more than a third of emerging markets GDP. It is half the economic size of the U.S. but is growing 3 times faster. China already commands a dominant position in many markets either as a client or a supplier.

 

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