MainStay Market Minute: Manufacturing Is on the Rise

NEW YORK - April 29, 2016 - PRLog -- Poul Kristensen and Charles Reinhard, Managing Directors for New York Life MainStay Investments, provide their views on earnings, the economy and international equities as part of their MainStay Market Minute program.

On average, more than ¼ of the S&P500 firms have reported results about 3.5% better than the consensus estimates for these firms but are on pace for profits to be lower than a year ago.  However, profit growth is expected to resume in the second half of this year, as headwinds such as low oil prices and a strong dollar affect profits and the trend in manufacturing improves both domestically and globally.

In fact, according to the U.S. ISM Manufacturing Survey, manufacturing has improved three months in a row while the China Purchasing Managers Index shows Chinese manufacturing improvement as well.  With a current index level at 50.2, Chinese manufacturing seems to be expanding rather than contracting.  So after more than a year of decelerating industrial activity, a transition seems to be on the way for both US and China, with a potential ripple effect for other economies around the world.

For opportunities in building long-term wealth, Poul and Charles believe there are opportunities in international developed equities.  As shown in the International Equity Market Valuation chart, the ratio of price to expected earnings is below its long term average, which may provide long term tailwinds for investors.  International developed stocks also carry a higher dividend yield than US stocks, which can be enticing in the low-rate world.

With negative policy rates in Europe and Japan, it is hard to predict what this will mean for currencies over a long period of time.  Therefore, Poul and Charles recommend a 50% currency hedge as a sensible way to hedge the current volatility.

To watch this interview and future updates from New York Life MainStay, tune into Asset TV's New York Life MainStay Investments Channel Page: http://bit.ly/1TaCj07


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