Alhambra Investment Partners

About the Author Alhambra Investment Partners

At Alhambra we begin with the belief that you are unique. And since unique situations require unique solutions the first step is to listen to you. There is no one-size-fits-all investment plan, so before we invest the first dollar we get to know you, your goals and your dreams. Next we compare your specific needs and requirements to determine whether active or passive investing is right for you and whether your plan should be strategic or tactical or both. Finally, we take our analysis and engineer a custom investment portfolio that matches who you. Alhambra investment decisions are based on our own extensive research and expertise. Our research staff has almost 100 years of combined market experience. The team drills deep into corporate data to find the smallest details that others miss, looking for true opportunity for our clients. The members of our team are highly respected in the financial industry and their insights are sought after by television business networks and radio programs. Their opinions and commentary are also widely quoted in financial publications as well as a multitude of internet outlets such as RealClearMarkets.com.

Macro Backdrop: High Conviction Rally Approaching?

by Douglas R Terry, CFA

As depicted by Macro Research Board, the current cycle has been “abnormal.” The depth of the downturn in 2008 led to deleveraging and risk aversion in the financial and household sectors. This, coupled with the sheer weight of aggregate debt, has caused “a prolonged risk on/off environment.”  This has “undermined investor confidence,” and “slowed the transition between the policy-induced rally and growth-driven upleg” seen in previous cycles.

The GDP output gap remains and inflation is stubbornly low. But, global monetary policy remains accommodating.

pro growth monetary policy

Bull markets typically end when policy becomes restrictive. This is not the case today.

bull ends when policy restrictive

The counter trend pull back and transition from the policy-induced rally to a growth-driven rally has been choppy. Recent geo-political events have exacerbated the risk on/off environment. Investors are extremely cautious right now, they fear rate hikes will undermining growth.

attempt at phase 5

But factors still favor growth; and, the global economy and earnings are poised for improvement, strength and momentum. Should this transpire, it would support further equity advances and potentially lead to a high conviction rally. MRB’s cyclical, phase 5 rally historically lasts 70 weeks and produces an average 40% stock market out-performance.