Page 3 - ISQ UK_October 2017

APRIL 2019

a logical next cap on rates, albeit at higher levels, would be the Second, new global sulphur emission standards taking effect in
massive demand from underfunded pensions and the Baby Boom January 2020 will effectively erase as much as 1.5 mm bpd of supply.
generation seeking stable income with lower volatility in This, combined with our expectation that global oil demand growth
retirement. will remain healthy, could allow oil (WTI) to move north of $70/
barrel by the end of the year, according to our energy research team.
With slowing global growth and nascent inflationary fears, yields
overseas are likely to remain depressed for the foreseeable future. Moving forward, it is not feasible for markets to continuously rise
In fact, the University of Michigan inflation expectations survey for or fall, so don’t get caught up in the momentary noise. While
hte U.S. for the next five to ten years recently fell to 2.3%, tying the records can be broken, we can’t lose focus on what the long-term
lowest level on record. Doug Drabik expects higher interest rates to trends are telling us. Staying disciplined during times of
continue to face major headwinds likely keeping them range bound uncertainty and times of complacency is an essential
and low. characteristic of a successful investor.
Although credit-market spreads have narrowed, we believe
companies and countries with modest leverage and strong balance
sheets should outperform. Simply buying yield will not work. James
Camp* believes that credit fundamentals are paramount as leverage
has increased materially with a record 50% of investment-grade
bonds in the BBB-credit rating range – slightly above ‘junk.’

Record oil production in the U.S. is expected to continue, with
average daily production forecasted to reach approximately 12
million barrels per day (mm bpd) by year end. While this would
normally place a cap on oil prices, two market dynamics are
supportive. First, OPEC production cuts have reduced overall
supply. In particular, sizable cuts by the largest OPEC producer,
Saudi Arabia, are adding to undersupply. In fact, total OPEC Lawrence V. Adam, III, CFA, CIMA®, CFP®
production is at its lowest level since 2015. Chief Investment Officer, Private Client Group

All expressions of opinion reflect the judgment of Raymond James & Associates, Inc., and are subject to change. Every investor's situation is unique and you should consider your
investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Commodities
and currencies investing are generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp
price fluctuations even during periods when prices overall are rising. Fixed income investments may involve market risk if sold prior to maturity, credit risk and interest rate risk. Asset
allocation does not ensure a profit or protect against a loss. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. The S&P 500 is
an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

Investment Strategy Committee Members

Lawrence V. Adam, III, CFA, CIMA®, CFP® – Committee President, Pavel Molchanov Senior Vice President, Energy Analyst, Equity Research
Chief Investment Officer, Private Client Group
Kevin Pate, CAIA® Vice President, Asset Management Services
Chris Bailey European Strategist, Raymond James Investment Services
Paul Puryear Vice Chairman of Real Estate Research, Equity Research
Scott J. Brown, Ph.D. Chief Economist
Ted Ruddock Head of High Net Worth, Fixed Income Services
James C. Camp, CFA Managing Director, Strategic Income,
Eagle Asset Management* Jeffrey Saut Chief Investment Strategist
Tom Thornton, CFA, CIPM Vice President, Asset Management Services
Doug Drabik Managing Director, Fixed Income Research
J. Michael Gibbs Managing Director, Equity Portfolio & Technical Strategy
Chief Investment Office
Nick Goetze Managing Director, Fixed Income Services
Anne B. Platt, AWMA®, AIF®, RICP® – Committee Chair, Vice President,
Peter Greenberger, CFA, CFP® Director, Mutual Fund & 529 Plan Investment Strategy & Product Positioning, Investment Strategy
Product Management
Kristin Byrnes – Committee Vice-Chair, Senior Manager, Investment Strategy
Nicholas Lacy, CFA Chief Portfolio Strategist, Asset Management Services
Giampiero Fuentes Investment Strategy Analyst, Investment Strategy
Joey Madere, CFA Senior Portfolio Analyst, Equity Portfolio & Technical Strategy
Taylor Krystkowiak Investment Strategy Analyst, Investment Strategy
Ed Mills Washington Policy Analyst and Managing Director, Equity Research
2