Global equity markets have been flat to down since the tariff and trade policy discussion began at the end of February. Equity investor sentiment and the short-term trading pattern for stocks have been dominated over the last four months by the potential for an escalation of a trade war between the United States and our global trading partners. A leveling of unfair trade obstructions is desired, however to the extent the effort may cause an exacerbation and heightening of artificial trade cost that has real-world consequences, the trade strategy has significant risks. There are of course other concerns that investors need to consider. Central banks’ policies will increasingly become less supportive of global economies as they normalize interest rates and their balance sheets. Corporate margins are likely to trend lower over the next few years as wage pressure, due to tight labor markets, and an increase in debt service from relatively high corporate debt levels begin to negatively impact earnings growth. These are secular issues that will likely dampen equity returns, bringing them below long-term historic averages. However, the fundamentals remain solid with positive economic momentum driving earnings growth. S&P 500 earnings are projected to grow 22.3% in 2018 and 9.7% in 2019, according to Lipper. With valuations less onerous (S&P 500 is trading at 16.9x FPE), we would expect equities to work higher assuming the trade issue recedes.
|Bank Name||Peapack-Gladstone Financial Corporation|
|CEO||Mr. Douglas L. Kennedy|