Clinton and Trump need to start focusing on the real issues facing this country rather than appealing to and appeasing the fringe populists on the far right and left. We have always been, and need to remain, a centrist nation under one tent. We need to strengthen our tax, financial, regulatory and foreign policies to restore our status and credibility in the world. Building walls to stop immigration and voting down international trade deals are not the solution. Opening up America more is. But agreements must be adhered to or penalties will be accessed quickly.

Trickle-down economics does not work nor does redistribution of wealth. Neither approach stimulates growth longer term. We need pro-growth policies that won't change with each administration. Both individuals and corporations need some certainty so they can plan for the long term. What needs to be done is so obvious. Why isn't it done? I blame the politicians and the PACs!  

The economy accelerated over the summer after a revised downward second quarter growth of only 1.1 percent. We expect inventory accumulation alone to add over 1.5 points to second half growth which will average at least 2.8 percent. We continue to have an accordion-like economy, so it is impossible to project this much higher growth in the second half of this year forward into 2017. We continue to look for growth in 2016 and 2017 around 2.0 percent. No big deal but not bad either. The real surprise in the second quarter report was that corporate profits accelerated to a 4.9 percent gain over the first quarter although still down year over year. We continue to look for accelerated S&P earnings growth over the next 18 months especially as earnings comparisons for the energy and materials sectors kick in next year.

We expect the Fed to make a small upward adjustment in the Funds rate in December if the outlook for the global economies continues to improve and the dollar stays range bound. Ironically, this move may end up stimulating growth, as the savings rate increase will exceed the higher interest rate cost expense thereby benefitting consumer demand.

Our portfolio is tilted towards beneficiaries of more economic growth and a slightly steepening yield curve. We continue to own only best in class managements with clear winning strategies in a globally competitive landscape; those with strong earnings growth and generating excess cash used to support long term investment, acquisitions, higher dividends and added buybacks.

Since change is afoot we are concentrating on agile companies who are shifting their mix of businesses to enhance future returns, as they will be revalued upward over time. Financials are one of the largest sectors in our portfolio as they will be the prime beneficiaries of economic growth and a steepening yield curve. On the other hand, we continue to reduce the number of "safe" stocks like consumer nondurables, drugs, retail and utilities. The dividend yield in our portfolio continues to exceed 2.5 percent.