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StonebridgeFOCUS - Growth in the Spring

In the 1979 movie Being There, which is based on Jerzy Kosinski’s book of the same name, Peter Sellers stars as a simple-minded gardener named Chance. Following the death of his employer and guardian, Chance is kicked out of the Washington, DC, townhouse he has called home for his entire life and forced to aimlessly wander the streets. He can neither read nor write. His only education and contact with the outside world have been through television. He is eventually befriended by a wealthy industrialist and political insider who thinks Chance is a highly educated businessman merely down on his luck. Chance the gardener (now mistakenly known as Chauncey Gardiner) becomes an instant sensation on the Georgetown cocktail circuit. His remarks are simplistic and literal, and mostly refer to gardening. Yet everyone over-interprets his simple sayings, imbuing them with deep allegorical meaning.


In one scene, Chauncey gets to meet the president of the United States. The president asks him if the economy can be stimulated through temporary incentives. Chauncey replies, “As long as the roots are not severed, all is well. And all will be well in the garden.” And, yes, “There will be growth in the spring.”

Recently, SEI Private Trust Company published their first-quarter Economic Outlook entitled, “There Will be Growth in the Spring, by Chance,” which we thought would be of interest.

A summary of the conclusions is provided below.

  • A sluggish first quarter and an inverted Treasury yield curve have raised concerns regarding the bull market’s health.
  • Until we see a more significant deterioration in the economic and financial fundamentals that have underpinned the global bull market in risk assets over the past two years, our default investment stance is to stay the course.
  • We expect that U.S. equities will remain well-bid, although international markets are long overdue for a period of improved relative performance versus the U.S. stock market.
  • Markets around the globe experienced a sharp risk-off move in late March. Concerns about European economic growth were one cause of the setback.
  • We believe that hints of economic revival in China, the likelihood of a trade agreement between the U.S. and China, and a dovish turn in the monetary policies of the U.S. Federal Reserve (Fed) will help equities grind their way higher in the months ahead.
  • On March 20, the Fed made some modest downward revisions in its latest projections of economic growth and inflation, and dramatically reduced its median forecast of the federal-funds rate. In addition to easing off the interest rate brake, the Fed signaled that quantitative tightening will end in September 2019. This should be a positive development for equities and other risk assets.
  • Emerging-market valuations remain attractive, in our opinion. There’s no denying that a sustained improvement in emerging markets depends on better global growth. In our view, China is the linchpin; we are optimistic that the country’s economic conditions will improve as it begins to feel the lagged impact of easier economic and monetary policies.
  • Our near-term optimism, however, is tempered somewhat by strategic considerations for the longer run. It’s quite likely that U.S.-Chinese relations will remain tense as a result of the geopolitical competition that continues to build between the world’s preeminent superpower and its up-and-coming competitor.

Our Point of View

The plunge in risk assets during the fourth quarter and subsequent bounce-back in the first quarter of this year is a reminder that one should always expect the unexpected when it comes to investing. In a world where the best- and worst-performing asset classes tend to dominate the headlines, it’s easy to lose sight of the fact that a diversified investment portfolio is generally the most reliable approach for meeting long-term investment objectives.

“You should have a strategic asset allocation mix that assumes you don’t know what the future is going to hold.”
Ray Dalio, Founder of Bridgewater Associates, one of the world’s largest hedge funds

To learn more about our distinctive goals-based approach to life and wealth management or request a copy of the full-length paper, please do not hesitate to contact our team directly.

We look forward to continuing to provide useful insights and relevant solutions focused on helping you achieve your greatest financial potential.

Thank you for your continued trust and confidence in Stonebridge.

All the best,



About SEI Private Trust Company

Now in its 50th year of business, SEI (NASDAQ:SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of Dec. 31, 2018, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $884 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including $307 billion in assets under management and $573 billion in client assets under administration.

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