Christopher S. Beck
Chief Investment Officer — Small-Cap Value / Mid-Cap Value Equity
Last week was very interesting for the market, in the sense that the earnings season finally finished. That means that the companies reporting earnings, we finally got done hearing about how the earnings went, and for the most part, they were actually fairly positive. Expectations had been low but the economy has tended to respond in a fairly decent way. We’ve seen some statistics last week that would support that, in terms of consumer credit. We had a payrolls number, which was very good for the jobs market, and then in the coming week we’ll have a couple statistics that will lead us for the consumer and manufacturing. We have capacity utilization, industrial production, new home sales and permits — it’s very important to see how the consumer responds in this environment of lower interest rates, and we’re hoping that the housing market continues to respond at least in a modest fashion, which it has been so far.
Now all these numbers have been pretty good for us on the small-cap value side. We’re expecting modest growth in the economy, modest earnings growth, and we expect that that will reinforce our positioning being more procyclical, meaning basic industries, capital spending, technology. And we expect the financials will also respond positively to this, so we expect to be keeping our positions the way that they have been.