A April Overview
The markets have rallied to new highs in the last month, with the rally very broad in nature. Most major indexes have jumped to new highs and we are continuing to see leadership in the Technology and Financial Services sectors. If the economy continues to improve, this rally could continue, albeit with some bumps in the road. There are a couple of thoughts we have regarding this market and the economy:
- One of the big question marks last year was Brexit (Great Britain leaving the European Union). The UK’s vote to detach sent global markets lower. However, European economies have continued to expand and this looks like a “non-event” to long-term economic growth.
- The earnings season has been very good in the US and the numbers have surprised to the upside. The media likes to attribute this post-election rally to the results. But, beneath the surface, the rally is being driven by an accelerating global economy and better earnings.
- We cannot help but think that the next economic slowdown will come from rising interest rates. This won’t play out in the short-term. Inflation will act as a catalyst for higher rates and we will be watching very closely as we move forward.
The markets are currently in rally mode and it’s a welcome change from the crazy volatility we experienced last year. That being said, we would expect volatility to rear its ugly head at some point this year. But, we believe the path of least resistance is still up. So, we will look to use market volatility to our favor.