* Downgraded agriculture commodities to neutral from neutral/positive.
* Decreased duration view to short/intermediate from intermediate.
* Our 2014 stock market forecast calls for gains of 10 – 15%, based on our forecast for 5 – 10% earnings growth and modest price-to-earnings (PE) multiple expansion.
* We favor small caps and cyclical sectors, as we expect U.S. economic growth to improve over 2014.
* Valuations and technicals drove our recent emerging markets (EM) upgrade to neutral.
* We are taking a more defensive stance against interest rate risk given bond market strength in 2014. Higher valuations are still evident across the bond market, and a below-benchmark bond weighting may be appropriate.
* High-yield bond valuations suggest caution, but we still find higher yielding, fundamentally sound segments of the bond market such as high-yield bonds, bank loans, and preferred securities attractive.
* Our lowered agriculture commodities view reflects deteriorating technicals.
* From a technical perspective, we view the S&P 500 Index closing at new all-time highs as a bullish signal that indicates potential upside.
Jason A. Jennings, CFP®
6 W. 2nd St.
Frederick, MD 21701
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