BNY Mellon’s Lockwood Advisors Outlines Key Considerations for Investors in the Third Quarter

July 11, 2018

Anticipates increased volatility as global growth slows down and market jolts continue

King of Prussia, Pa. — BNY Mellon’s Lockwood Advisors, Inc. (Lockwood) today issued its second quarter 2018 Investment Insights, highlighting how recent market moves may impact investment decisions for the remainder of the year.

“Investors are likely longing for 2017 based on how the markets have performed through the first half of this year,” said Matthew Forester, chief investment officer, BNY Mellon’s Lockwood Advisors. “Unlike 2017’s stellar returns, this year has brought investors generally flat performance and heightened volatility despite excellent earnings and lower corporate tax rates.

“Looking ahead, it will be important to see how markets react to the continuing political theater around U.S. trade. Investors have been able to climb the ‘wall of worry’ to work past many previous market-jarring risk factors, but it’s likely that continued uncertainty will lead to increased volatility as we go into the second half of 2018.”

The report outlines key trends investors and advisors should be paying attention to:

Corporate earnings will likely slow

While Q1 2018 corporate earnings generally beat overall estimates, this may lead investors to misjudge growth for the remainder of the year. Lockwood believes the pace of sequential earnings gains is likely to slow from the first quarter’s torrid pace unless there is dramatic acceleration in the underlying economy.

In wake of a slowing global economy, the impact of geopolitical risks may become more pronounced

While markets have previously shrugged off certain geopolitical challenges, it appears likely that investors will become more sensitive to these risks in the second half of this year. Underlying these concerns are signs the global growth engine is sputtering while domestic implications of the U.S. tax plan have not fully been absorbed—especially as it pertains to fiscal debt.

Currency risk will likely have a greater impact on investment portfolios

Countries with large fiscal and current account deficits are facing a squeeze due to a strong U.S. dollar as global growth becomes more disjointed.

U.S. investors should consider the risk profile of their portfolios vis-à-vis foreign currency—volatility between major currency pairs has been playing an increasingly large role in returns, particularly with interest rates at low levels.

Despite near term currency struggles against the strength of the U.S. dollar, emerging markets are generally still looking more attractive than developed markets on a valuation basis.

Risk of trade war is escalating with potentially negative consequences for the global economy

So far, the U.S. economy and corporations have looked healthy enough to withstand the limited scope of the current trade concerns. If negotiations spiral out of control, however, the rock-and-hard-place quandary of higher prices and lower output could damage the economy. Financial advisors should continue to brace themselves for the potential for more volatility as trade negotiations heat up and they evaluate risks of a stagflationary outcome. It will ultimately be up to investors and the markets to distinguish between negotiation tactics and likely policy outcomes.

“Like last quarter, tighter risk management and properly gauging client risk appetite seem likely to help advisors achieve better outcomes,” adds Forester. “Intermittent fasting and anticipating periodic lean times may help achieve an investment diet that suits the medium and the long-term outlook.”

For more information on these trends as well as other issues such as a tightening monetary policy, please visit for a view of the full report.

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.