Falling gas prices weigh on U.S. inflation. Consumer price inflation data shows inflation fell 1/10 of 1% last month. At an annualized rate of 1.9% inflation is very tame. A 7.5% drop in gasoline prices offset increases in food, shelter, and electricity services. Excluding more volatile components such as food and energy (Core CPI), inflation was up 2.2% year over year. Though not the Federal Reserve's (Fed) preferred inflation measure, consumer prices have ticked lower recently, but growth rates remain in a healthy range that supports flexibility on the Fed's part. (LPL)

The Wall Street Journal reported that investors began 2018 anticipating inflation, but higher consumer prices have not materialized. Returns for Treasury inflation-protected securities ended the year down 1.4 percent, while returns for fixed-rate US government debt rose 1.9 percent. 

Global earnings expectations have converged. Though earnings growth is expected to be stronger in the U.S. and EM in the coming year, that gap has closed, with 6% expected in developed international markets, 7% in the U.S., and 8% in EM, according to FactSet estimates. 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.