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Investment Commentary
INVESTMENT STRATEGY | MARCH 11, 2024
Alternatives: Private Equity Companies Continue Their Ascent
by Mark Steffen, CFA, CAIA | Global Alternative Investment Strategist of Wells Fargo Investment Institute
The number of private-equity-owned companies continues to grow, which may reflect the trend of companies remaining private longer, often during the higher growth phase of their life cycle. We believe that investors that allocate to both public and private markets may potentially capitalize on the broadest array of opportunities when attempting to realize their long-term financial objectives. [Read more]
INVESTMENT STRATEGY | FEBRUARY 12, 2024
Equities Spotlight: The Path Forward After Recording Record Highs
by Chris Haverland, CFA | Global Equity Strategist of Wells Fargo Investment Institute
After reaching a bear market low of 3577 on October 12, 2022, the S&P 500 Index has experienced an impressive rally, recently touching a record high. Until broader participation is sustained, and earnings growth accelerates, we continue to be defensive and focus on quality in our guidance. [Read more]
INVESTMENT STRATEGY | JANUARY 16, 2024
Equities: Adjusting 2024 Equity Targets
by Austin Pickle, CFA | Investment Strategy Analyst of Wells Fargo Investment Institute
We have increased our 2024 S&P 500 Index earnings and price targets, as well as all other asset class benchmark price targets and select earnings targets. These moves are supported by a somewhat improved first-half economic outlook and the increased likelihood of Federal Reserve (Fed) rate cuts this year. [Read more]
INVESTMENT INSTITUTE | DECEMBER, 2023
2024 Outlook: A Pivotal Year for the Economy and Markets
by Darrell Cronk, CFA | President of Wells Fargo Investment Institute
The U.S. economy proved resilient throughout 2023 with key support from consumer spending, a strong labor market, and business capital spending. The journey, however, was more difficult for investors, as the Federal Reserve (Fed) raised interest rates, tightened monetary conditions to battle inflation, and will now be faced with the lagging impacts on the real economy as 2023 ends and the calendar turns over into 2024. [Read more]
INVESTMENT STRATEGY | NOVEMBER 21, 2023
Why Own Stocks? Three Elements for Long-Term Investors to Consider When Investing in Stocks
by Alexander Sagal & Joseph Buffa| Equity Sector Analyst of Wells Fargo Investment Institute
Key takeaways: Why should someone invest in stocks? Historically, stocks have performed well when compared to other asset groups and have typically outpaced inflation. We believe stocks play an important role inside a well-diversified portfolio. Before allocating capital to this asset group, we recommend investors consider the following elements. [Read more]
INVESTMENT STRATEGY | OCTOBER 16, 2023
Fixed Income: Five Reasons to Hold Bonds – Even When Rates Are Rising
by Brian Rehling, CFA | Head of Global Fixed Income Strategy of Wells Fargo Investment Institute
The Federal Reserve is likely to keep interest rates elevated well into next year. Despite high yields, there are many benefits to owning bonds. Higher yields have led to negative market price performance for many fixed-income securities. However, the higher yields also now provide the potential for positive real returns (the return over inflation) going forward. [Read more]
SPECIAL REPORT | SEPTEMBER 8, 2023
The Ascent of Generative AI – What Investors Should Know
by Wells Fargo Investment Institute
Artificial intelligence (AI) and, more specifically, large language models like ChatGPT have garnered much discussion throughout the first half of the year. We have seen excitement building around the development of generative AI and subsequent disruptions that may impact multiple industries over the longer term given its focus on productivity, efficiency, and cost reduction. The recent emergence of generative AI capabilities has generated considerable investor enthusiasm surrounding the new disruptive technology, particularly during the first half of the year. In this report, we discuss our view on how investors should navigate the generative AI landscape with topics ranging from our macroeconomic perspective to specific investment implementation ideas. [Read more]
INVESTMENT STRATEGY | JULY 10, 2023
Global Equity Spotlight: Runaway Bull?
by Austin Pickle, CFA | Investment Strategy Analyst of Wells Fargo Investment Institute
This year’s S&P 500 Index rally has prompted some to declare that a new bull market is upon us. We are less optimistic. In the near term, we see continued range-bound trading and favor a patient and disciplined approach that emphasizes quality. [Read more]
INVESTMENT STRATEGY | JUNE 20, 2023
Asset Allocation Spotlight: Beware of Cash Concentration
by Michelle Wan, CFA | Investment Strategy Analyst of Wells Fargo Investment Institute
As investors reallocate holdings toward cash and short-term fixed income, we believe it is prudent to align portfolio allocations with the designated investment objective, as large deviations from strategic and tactical weightings could lead to lost opportunities. We continue to favor a barbell approach to fixed-income positions. We believe maintaining exposure to high-quality equities could also help investors navigate through today’s complex macroeconomic environment. [Read more]
ECONOMIC AND MARKET OVERVIEW | JUNE, 2023
2023 Midyear Outlook
by Darrell Cronk, CFA | President of Wells Fargo Investment Institute
Of the last nine Federal Reserve (Fed) tightening cycles, seven have resulted in recession. This current tightening cycle is the fastest and most aggressive since 1981 and makes it difficult to believe the U.S. economy can avoid a contraction when the dust eventually settles. The good news is that we believe there is firm evidence that the inflationary pressures of the past several years are in retreat and that the Fed’s actions have been working as intended. [Read more]
INVESTMENT STRATEGY | APRIL 24, 2023
Equities: Bear Mark Check-In
by Chris Haverland, CFA | Global Equity Strategist of Wells Fargo Investment Institute
After reaching a bear market low of 3,577 on October 12, 2022, the S&P 500 Index has experienced an impressive rally. We believe it is unlikely equity markets will continue unscathed leading up to and during a recession. Therefore, we suggest maintaining a defensive stance in portfolios and leaning toward high-quality assets over low-quality assets. [Read more]
INVESTMENT STRATEGY | MARCH 13, 2023
Fixed Income: Stubborn Inflation, Feisty Fed
by Peter Wilson | Global Fixed Income Strategist of Wells Fargo Investment Institute
The volatile start for global bonds in 2023 is explained by the turnaround in the market’s expectations for year-ahead inflation and the renewed rise in the market-implied peak federal funds rate. In this environment, the U.S. Federal Reserve (Fed) will likely not signal a pause anytime soon. Short and long-term bond yields and the U.S. dollar are supported, risk assets look vulnerable. [Read more]
INVESTMENT STRATEGY | FEBRUARY 21, 2023
Asset Allocation Spotlight: Stay Disciplined on the Path to Recovery
by Veronica Willis | Global Investment Strategist of Wells Fargo Investment Institute
Allocations that include higher weights to fixed income experienced losses similar to their declines during the 2007 – 2009 equity bear market and may potentially take longer to recover than growth-oriented allocations. We believe maintaining consistent allocation targets can help in an effort to ensure that the allocation behaves as intended through volatile markets. Income investors should be cautious before increasing equity exposure. [Read more]
INVESTMENT STRATEGY | JANUARY 17, 2023
Fixed Income: U.S. Treasury Yields Decline – Long-term Bonds Benefit
by Luis Alvarado | Investment Strategy Analyst of Wells Fargo Investment Institute
U.S. Treasury yields have been trending lower in the first two weeks of the year, influenced largely by the macroeconomic outlook, and the bias remains to the downside. Our tactical move to extend duration has been supported as yields have declined significantly since late October, allowing long-term fixed income the potential opportunity to experience a strong recovery. [Read more]