As we enter 2016, we want to thank you for the continued trust and confidence you place in Perkins Coie Trust Company. On the investment front, we anticipate continued stock market volatility this year as diverging global monetary policies, falling liquidity and peaking U.S. corporate profit margins create a more difficult environment. Despite this, our principles of portfolio construction remain the same, and maintaining appropriate levels of discipline, diversification and patience is likely to be rewarded over the next decade with fair inflation-adjusted returns.

U.S. earnings are projected to rise in 2016 with gains in Consumer Discretionary, Tech and Staples; projections also assume that 2016 will be close to the bottom for Energy and Materials. We expect consumer revival in the developed world to continue, fueled by low inflation, low commodity prices and less fiscal austerity. We believe the U.S. economy will grow at a rate of 2.5% to 3.0% in 2016, a bit stronger than 2015. The U.S. economy appears to be in a “simmering growth” mode, which, although less than optimal, at least reduces the likelihood of economic overheating. We remain positive on stocks compared to investment alternatives such as bonds and cash. Now that the Federal Reserve has finally raised the federal funds rate, we will not only focus on the pace of future rate increases, but also yield spread (the difference between a 10-year U.S. Treasury note and a 3-month Treasury bill), inflation and unemployment in all of our investment decisions.