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Answers to your FAQs


What is Janney’s economic outlook for 2014?

We host a rather sanguine view of economic conditions for 2014. The economies of the U.S. and Euro area are growing, and the pace is poised to accelerate. Japan appears to have cleared its perennial bouts of recession/deflation, and policy reforms give reason to believe it’s sustainable. While China’s economy has downshifted, its growth rate remains enviable and policy makers seem committed to real, and healthy, adjustments to open its marketplace in myriad ways. Taken together, 85 percent of the world’s economy is expanding in a synchronized fashion.

While this is certainly welcome, it is also necessary to bring the process of large-scale central bank intervention to an end. The Federal Reserve, and its counterparts in the UK, Europe, and Japan, have adopted exceedingly lenient interest rate policies and implemented other non-conventional monetary tools in an effort to amplify economic activity. While it has helped to stoke growth and stabilize financial conditions, it remains somewhat unsettling that roughly five years removed from the financial crisis and recession, central banks still occupy such a large presence in the market.

Fortunately, the signs of a self-sustaining expansion are beginning to materialize. In the U.S., the world’s largest economy, labor markets are strengthening, bank lending is increasing, consumers and businesses are spending—collectively at a pace that portrays enough inertia to encourage policy makers.

The Fed’s gigantic bond-buying regime is being wound down, and other central banks have halted or eased back on similarly designed programs. While it will be quite some time before the uber-easy policies of global central banks are reversed, their expanse is clearly waning. The story for the New Year and beyond will be the shift from hyper-accommodation to normalization and what, if any, the consequences of policies employed to save the financial system and resuscitate economies have left behind in their wake.

While 2013 was a terrific year in the equity markets, the same cannot be said for the bond market. Improving economic conditions, growth in corporate earnings, and the lack of choices for risk-based capital combined to drive investors to the equity markets—pushing prices higher.

While returns in the U.S. increased most, bourses from Japan to Germany also had stellar years. Given the continued favorable backdrop for risk assets, equities should produce attractive returns once again. Arguably, higher beta non-U.S. equity markets offer greater potential for appreciation, given the growing acceptance that global growth is gathering momentum. That background typically does not serve interest-rate-sensitive investments very well. While inflation is benign at the moment, the anticipation of higher rates as a consequence of a better economy is enough to alter the landscape for bond prices. Most categories of bonds, with the exception of high yield, fell in value and are likely to be under pressure again in 2014. Adopting a framework of capital preservation by shortening duration and increasing liquidity may prove to be the best defense, if interest rates grind higher again this year as last.

To read Janney’s full 2014 Outlook , visit and be sure to attend Janney’s next Retirement Solutions Event, Feb. 11 from noon-1:30 p.m. at Mohegan Sun at Pocono Downs. Contact Peter D. Shelp, AWMA, ChFC at Janney Montgomery Scott LLC, 270 Pierce Street, Kingston 18704. Call (570) 283-8140. Prepared by Mark Luschini, chief investment strategist, Janney Montgomery Scott LLC. Copyright 2014.