Expectations for 2017 Market

An overview of expectations and factors that could affect the market in the coming year were outlined by strategist Burt White of LPL Financial in a recent Barron’s article. GDP: “We expect growth to accelerate modestly to near 2.5% with a low chance of a recession in 2017, driven by gains in consumer and business spending, supported by potential pro-growth fiscal policies.” While White says the odds of a recession based on economic data remain low, a “policy mistake” by the incoming administration could increase risk. LPL, he writes, expects stocks to outperform bonds in 2017, but with the “overall […]

U.S. Stocks Show Increased Global Footprint

The post-election market rally coupled with the strength of the U.S. dollar has increased the share of U.S. stocks as a percentage of the global economy, according to this week’s Wall Street Journal. FactSet data reflect the market capitalization of U.S. stocks at approximately $25 trillion last Friday, a figure that represents 40% of the value of global equities, the article says—the highest level since 2006. “Investors and traders have largely interpreted the president-elect’s policy priorities as likely to benefit U.S. businesses,” the article states, “particularly his plans to cut corporate taxes and increase fiscal stimulus. Also, bets on higher […]

Does the Market Trust Trump?

“Reading market movements—such as the steep rise in stock prices in the early post-election days as well as the subsequent ups and downs—requires a Rosetta stone,” writes Harvard economics professor Sendhil Mullainathan in a recent New York Times article. An increase in stock prices, he writes, “signals an expected increase in future profits” for investors, but even those who do not own stocks can become more optimistic since in a well-functioning market the interests of companies and consumers track each other. On the other hand, the professor writes, “the stock market can be a poor scoreboard for the economy. Sometimes […]

Doll Bullish on Stocks

The S&P 500 inched up another 1.2% last week and, according to a Barron’s article by Bob Doll of Nuveen Asset Management, while equities are expensive on a historical basis they are still an attractive alternative to bonds and cash. Doll outlines his take on current market conditions: The Fed will probably raise rates in December, provided “economic growth remains on track and the global financial system does not endure an additional shock.” U.S. inflation is “slowly creeping higher.” Economic growth in 2017 may resemble that of 2016, but he predicts that growth next year could be even slower. U.S. […]

Sonders Says Recession Risk is Low

Although there are those that believe the U.S. is on the brink of recession, Liz Ann Sonders, Charles Schwab’s chief investment strategist, says the risk is low. This according to CNBC’s report on her commentary at the Morningstar ETF Conference in Chicago earlier this month. While Sonders says there are no clear buy signals at present, the market “could continue to grind higher, but not without drama. An ongoing secular bull market is still a decent bet.” While admitting that our economy is in turmoil, she differentiates between an economic recession and an earnings recession—what we’re facing now—which was caused […]