World in Pictures
By Rod Smyth, RiverFront Investment Group

The G20 meeting in Hamburg this past weekend turned out to be something of a G19 +1. It is unprecedented in the post WW ll era for the US to be so isolated from the rest of the world.

Europe has just completed a trade deal with Japan and is happy to form deeper relations with China as its relationship with Russia remains terse. All that said, our charts show that synchronized global growth is clearly occurring:

US purchasing managers survey index hits a 3-year high…

us-purchasing-managers

…Eurozone recovery seems to have become self-sustaining at a steady pace as retail sales settle into a 2.5% growth rate …

eurozone-real-retail

… even Japan is enjoying some of its highest corporate confidence in several years.

… even japan is enjoying some of its highest corporate confidence in several years

… while China’s purchasing manager surveys have improved over the last year.

china-purchasing-managers-index

We believe the bull market in global stocks is simply reflecting a positive environment for global earnings growth and the realization that while the world’s leaders have some major ideological differences, they are united when it comes to the desire for economic growth.

Rod Smyth is the Chief Investment Strategist at RiverFront Investment Group, a participant in the ETF Strategist Channel.

Important Disclosure Information:

Past results are no guarantee of future results and no representation is made that a client will or is likely to achieve positive returns, avoid losses, or experience returns similar to those shown or experienced in the past.

RiverFront’s Price Matters® discipline compares inflation-adjusted current prices relative to their long-term trend to help identify extremes in valuation.

Technical analysis is based on the study of historical price movements and past trend patterns. There are no assurances that movements or trends can or will be duplicated in the future.

Investments in international and emerging markets securities include exposure to risks such as currency fluctuations, foreign taxes and regulations, and the potential for illiquid markets and political instability.
In a rising interest rate environment, the value of fixed-income securities generally declines.

Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

In Japan, the Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.

In China, the NBS Manufacturing Purchasing Manager Index measures the performance of the manufacturing sector and is derived from a survey of more large-scale, state-owned companies. The index is based on five individual indexes with the following weights: New Orders (30 percent), Output (25 percent), Employment (20 percent), Suppliers’ Delivery Times (15 percent) and Stock of Items Purchased (10 percent), with the Delivery Times index inverted so that it moves in a comparable direction. A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction; while 50 indicates no change.

The Tankan Large Manufacturing Index rates the relative level of general business conditions in the manufacturing sector. On the index, a level above zero indicates improving conditions; below indicates worsening conditions.

The comments above refer to generally to financial markets and not RiverFront portfolios or any related performance.

RiverFront Investment Group, LLC, is an investment adviser registered with the Securities Exchange Commission under the Investment Advisers Act of 1940. The company manages a variety of portfolios utilizing stocks, bonds, and exchange-traded funds (ETFs). RiverFront also serves as sub-advisor to a series of mutual funds and ETFs. Opinions expressed are current as of the date shown and are subject to change. They are not intended as investment recommendations.

These materials include general information and have not been tailored for any specific recipient or recipients. Accordingly, these materials are not intended to cause RiverFront Investment Group, LLC or an affiliate to become a fiduciary within the meaning of Section 3(21)(A)(ii) of the Employee Retirement Income Security Act of 1974, as amended or Section 4975(e)(3)(B) of the Internal Revenue Code of 1986, as amended. Copyright ©2017 RiverFront Investment Group. All rights reserved. (2017.14)

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