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Northern Light?


Northern Trust is a huge Chicago-based money manager that successfully styles itself as home for America’s blue-bloods, i.e., the extremely wealthy and discerning.  Like all big money managers, they brag about their proprietary investment research department, as if that was something unusual.  Their forecasts are obviously written by economists and strategists for other economists and strategists, not the average investor.  But, their latest forecast is somewhat more interesting than usual:

1.  Referring to the confirmation hearing of Fed Chairman designate Janet Yellen, there was a “noticeable lack of animus from Republican senators, which may be a reflection of evolving political strategy” . . . hum?  Is something going on?

2.  The “economy is in a slow-growth, low-inflation environment”. . . well, duh!

3.  There is “a supportive environment for high yield investments,” which is a prime building block for income portfolios and is a good thing for income investors.

4.  The “U.S. stock market during the last 85 years shows a pattern of strong years being followed by another positive year.  Specifically, we have had 31 years of greater than 20% stock market gains in this period, and in 22 of those instances, the following year showed another positive return from equities.”  (Those are great betting odds, if history means anything, but does it?)

5.  “We also continue to believe that the risks of fiscal problems in Washington, D.C., and uncertain policy progress in Japan and Europe, remain manageable.”  Re-assuring, yes!  But, why?  Did the Congressional cry-babies suddenly grow up?

My sense from reading the full report is that there may have been a fundamental shift in the Republican strategy for dealing with President Obama.  They didn’t get specific but implied less confrontation and more negotiation.  I hope so!

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