BNY Mellon’s Lockwood Issues First Quarter Investment Insights

April 9, 2018

Outlines Five Trends to Watch

King of Prussia, PA—BNY Mellon’s Lockwood Advisors, Inc. (Lockwood) today issued its first quarter Investment Insights, highlighting key trends to watch for the rest of the year.

“2017 was an unbelievable year in many respects,” said Matthew Forester, Chief Investment Officer, BNY Mellon’s Lockwood Advisors. “Markets across the globe were up and volatility was at its lowest levels —all adding up to highly unusual conditions that are hard to replicate.

“In the first quarter, we saw investors seemingly getting nervous and reacting quickly and strongly to any news item that has the potential to move markets. If volatility continues to increase, it could damage this long-standing bull market. And although we see the shorter-term trends to be intact and we have not yet seen the business cycle turn, as markets quicken their pace in reacting to events, we remind investors to stay cautious and review their asset allocation strategies with their advisors.”

In the report, Forester outlines five key areas he believes investors should be paying attention to and discussing with their advisors:

  1. Return of volatility – The trend towards higher inflation looks real at this moment. However, it appears it will not be as abrupt as markets feared in February. There are a few other concerns that may contribute to increased volatility in the markets, including the lateness of the economic cycle, the degree of complacency in market positioning (structural or explicit short volatility bets) and the worries concerning trade policy.
  2. Trade worries – Restrictive trade policy is stagflationary (reductions in output and increases in inflation). So, if the market begins to demonstrate a fear of serious retaliatory trade measures, it will not help either stocks or bonds. Moreover, current administration policy (fiscal stimulus) will likely exacerbate concerns about the twin deficits arising from a current account deficit and fiscal deficit.
  3. Interest rates – Even though the U.S. economy has seemingly hit a bit of a soft patch, as gross domestic product expectations for the first quarter continue to decline against early forecasts, these one-off issues are unlikely to derail the Federal Reserve (the Fed) from hiking interest rates throughout the year, as the new band for Federal Funds (1.50-1.75%) is still under current inflation readings.
  4. Fed moves in outer years – Under new leadership, the Fed has taken its forecasts for growth in 2019 and 2020 up a notch and communicated expectations for additional rate hikes. In all years since the crisis, the Fed has had to come down to the market expectations for rate hikes. This year, though, the market has begun to believe the more hawkish tone from the central bank. It will be interesting to see how the market or the Fed adjusts in the outer years of 2019 and 2020.
  5. Politics at play – The outcome of mid-term elections could alter or reverse recent tax cuts and potentially raise the prospects for impeachment. Meanwhile, markets will likely have to absorb whatever results from the Russia probe led by the Special Counsel. All these items will make it more difficult to assess future policy directives from Washington and could also disrupt already touchy international discussions around trade.

“As we expected, 2018 has so far looked like a more sobering year than 2017,” adds Forester. “Risk factors could express themselves quickly, loudly and abruptly. The tax cuts could help give U.S. equities a tailwind, but there are numerous risk factors at play as the year moves along. We typically advocate focusing on the long-term, but paying some attention to the medium-term risk factors could help foster a more successful navigation of 2018.”

For more information on these trends and the full report, please visit: 

This material is intended for informational purposes only and does not constitute investment advice or an offer or solicitation to purchase, hold or sell any securities. The opinions expressed by Lockwood are as of April 2018, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Lockwood to be reliable, but are not necessarily all inclusive.This material may contain forward-looking information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

About BNY Mellon’s Lockwood Advisors, Inc.

Lockwood Advisors, Inc. is a leading provider of managed account solutions. As a program sponsor, Lockwood offers access to some of the industry’s leading investment managers, provides independent research on separate account managers, and develops advisory solutions to help investment professionals meet the diverse needs of their clients.

Lockwood also offers discretionary portfolio management solutions through financial institutions and independent registered investment advisers. Lockwood Advisors, Inc. is an investment adviser registered in the United States under the Investment Advisers Act of 1940, an affiliate of Pershing LLC and a wholly owned subsidiary of The Bank of New York Mellon Corporation (BNY Mellon).

About BNY Mellon's Pershing

BNY Mellon’s Pershing is a leading provider of clearing and custody services. We are uniquely positioned to help complex financial services firms transform their businesses, drive growth, maximize efficiency, and manage risk and regulation.

Wealth management and institutional firms outsource to us for trading and settlement services, investment solutions, bank and brokerage custody, middle and back office support, data insights, and business consulting.

Pershing brings together high-touch service, an open digital platform and the BNY Mellon enterprise to deliver a differentiated experience for every client.

Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. With offices around the world, Pershing has over $2 trillion in assets and millions of investor accounts. Pershing affiliates include Albridge Solutions, Inc. and Lockwood Advisors, Inc., an investment adviser registered in the United States under the Investment Advisers Act of 1940. Additional information is available on, or follow us on LinkedIn or Twitter @Pershing.

About BNY Mellon

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries. As of June 30, 2021, BNY Mellon had $45.0 trillion in assets under custody and/or administration, and $2.3 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK).Additional information is available on Follow us on Twitter @BNYMellon or visit our newsroom at for the latest company news.