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Investment Commentary

INVESTMENT STRATEGY | JANUARY 31, 2022

Equities: Anatomy of Stock Market Corrections

by Chris Haverland, CFA | Global Equity Strategist of Wells Fargo Investment Institute

Stock market pullbacks are normal occurrences with the S&P 500 Index correcting (at least a 10% decline) on average once per year since 1928. Although the lows may not be in place yet and volatility likely will remain elevated in the near term, we would advise investors to take advantage of weakness by adding to high-quality U.S. Large and Mid Cap Equities.  [Read more]


INVESTMENT STRATEGY | DECEMBER 13, 2021

Fixed Income Spotlight: The Federal Reserve in 2022

by Luis Alvarado | Investment Strategy Analyst of Wells Fargo Investment Institute

The Federal Reserve (Fed) will continue to play a key role in the global economy as it wrangles to tighten financial conditions and sustain the U.S. recovery. Our base case, for now, is that the Fed will only increase the federal funds target rate once in 2022 and, most likely, after it has finished purchasing assets.  [Read more]


INSTITUTE ALERT | NOVEMBER 15, 2021

Managing Portfolios Before Inflation Peaks

by Paul Christopher, CFA | Head of Global Market Strategy of Wells Fargo Investment Institute

We believe inflation will moderate in 2022, but we expect the path to lower inflation to begin with higher inflation in the front half of the year. The stickier drivers of inflation are likely to persist, but our base case is that they will not outweigh the improvement we expect in the transitory elements. What it may mean for investors: As long as the economy remains strong, the asset classes that we expect to outperform are those factors that drive both the economy and inflation. Our guidance aligns with favoring those sectors that we expect to outperform—and to avoid those that we expect to underperform—as inflation rises.  [Read more]


INVESTMENT STRATEGY | October 11, 2021

Equities Spotlight: Review of Stock Market Corrections and Rebounds

by Doug Beath | Global Investment Strategist of Wells Fargo Investment Institute

Stock market volatility has re-emerged and we expect this trend to continue. Absent a recession or excessive valuation, history suggests that equity-market downturns rebound relatively quickly, providing investors with an opportunity to rebalance portfolios.  [Read more]


SPECIAL REPORT | SEPTEMBER 28, 2021

The Perils of Trying to Time Volatile Markets

by Global Asset Allocation Strategy Team | Wells Fargo Investment Institute

Missing a handful of the best days in the market over long time periods can drastically reduce the average annual return an investor could gain just by holding on to their equity investments during sell-offs. While missing the worst days can potentially offer higher returns than a “buy and hold” strategy, disentangling the best and worst days can be difficult, since they often occur in a very tight time frame—sometimes even on consecutive trading days.  [Read more]


INVESTMENT STRATEGY | JULY 26, 2021

Equities Spotlight: Inflation, Rates, and Tapering, Oh My!

by Chris Haverland, CFA | Global Equity Strategist of Wells Fargo Investment Institute

Higher inflation, rising interest rates, and a less accommodative Federal Reserve could lead to short-term market volatility, but we expect the bull market to remain intact. Given the macro and earnings backdrop, we would view any pullback as buyable. We continue to prefer equities over fixed income, U.S. equities over international equities, and cyclical sectors over defensive sectors.  [Read more]


ECONOMIC AND MARKET OVERVIEW | JUNE 14, 2021

2021 Midyear Outlook

by Darrell Cronk, CFA | President of Wells Fargo Investment Institute

One year after the global economy emerged from lockdowns, the economy is running faster than many of us have seen in our lifetimes. The U.S. and China have led the way, thanks to the various COVID-19 vaccines, whose accelerating distribution is speeding the recovery and driving faster spending. This, plus a rise in private savings, low interest rates, and the “visible hand” of multiple government support programs are providing fuel for growth that should intensify the 2021-2022 U.S. economic recovery to its fastest two-year pace since 1965-1966. For the first four months of 2021, corporate bond issuance grew faster than it did during the prior fourth months. Elsewhere, S&P 500 Index value stocks handily outperformed growth, base metals and agricultural products posted decades-high prices, and many global benchmark equity indexes set new record highs while earnings ran to catch up with valuations.   [Read more]


GLOBAL EQUITIES | JUNE 3, 2021

Potential Opportunities as Congress Weighs Infrastructure

by Wells Fargo Investment Institute

President Biden's proposed $2.65 trillion American Jobs Plan and his $1.8 trillion American Families Plan seem likely to pass as proposed. We expect Congress to approve the spending proposals largely as proposed. We believe that the infrastructure spending plans could lift longer-term productivity and growth, potentially benefiting the Communication Services, Industrials, Materials, and Information Technology sectors and, particularly, the Utilities sector. Moreover, beyond the potential opportunities among our current list of favored equity sectors, we anticipate the American Job Plan’s emphasis on clean energy, clean water, and improving underserved communities should continue to support environmental, social, and governance research and products and could expand the landscape of private capital investments into digital infrastructure.  [Read more]


INVESTMENT STRATEGY | JANUARY 4, 2021

Portfolio Implementation Spotlight: Top 5 Portfolio Ideas for 2021

by Asset Allocation Strategy Team | Wells Fargo Investment Institute

Our expectation for improving economic data and bullish investor sentiment should support equities as the recovery continues into 2021. In periods of high volatility, we suggest taking action thoughtfully and not reacting emotionally to market conditions.  [Read more]