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Market and Economic News from LPL Financial Research Team

Week of May 22, 2017

MARKET COMMENTARY; This weekly update offers insights into domestic and global financial markets events, policy actions, and geopolitical impacts.

"Focus on Fundamentals"

KEY TAKEAWAYS

  • At times of uncertainty we suggest investors focus on the fundamentals of the economy and corporate profits.
  • Like everyone else, we don’t know what will happen with the Russia investigation, although we have made some observations about what the latest news could mean for fiscal policy.
  • We have a better handle on the basic fundamentals, which look pretty good right now and tend to drive stocks over time.

ECONOMIC COMMENTARY; This weekly update offers insights into the U.S. and global economy.

"Inflation Watch Update"

KEY TAKEAWAYS

  • We believe modestly higher inflation over the next year is likely as U.S. and global growth accelerates and wage pressure rises.
  • However, forces such as labor force expansion and stable commodity prices should keep any larger buildup of inflationary pressure at bay.



BOND MARKET PERSPECTIVES; This weekly update offers insights into major news and themes driving fixed income markets.

"Yearning for Yield"

KEY TAKEAWAYS

  • With Treasury yields still near record lows, income can be hard to come by, but opportunities in fixed income still exist for income-oriented clients.
  • Expensive valuations across many lower-quality fixed income sectors warrant caution when looking for income.
  • Lower-quality fixed income will generally not behave like high quality, especially in times of market stress; the economic sensitivity exposes investors to more equity sensitivity.