A November Overview
The markets have continued their “sugar rush” run after their summer doldrums. We have seen a number of analysts and professionals coming out and saying the markets are overvalued at these levels. But, while we may be trading a bit rich on valuation, we also see some very positive economic trends in the works:
Europe is in full-blown growth mode – We are seeing strength across the board in Europe. For the past six or seven years, it’s been Germany pulling the rest of the EU along. But now, Ireland, the UK and Spain have joined the parade. Europe is accelerating quickly after being in borderline recession for many years.
Profit acceleration – We typically experience a peak in profit margins and then a slowing in the economy. However, this cycle has been atypical. Profit margins peaked, softened and have now reaccelerated. Profit margin expansion is key in this cycle.
Earnings Reports - The primary driver for our most recent move has been the pace at which earnings have been growing. Most analysts expected good earnings. But, corporate earnings in the third quarter have been much stronger than most expected.
The global economies are lifting right now and earnings have been strong. With low interest rates around the world, this economic growth cycle has legs. The flip side of the coin is that the FED will continue to raise interest rates into the future. Eventually, higher rates will slow our growth. But, for now, we are enjoying this economic expansion.
On behalf of the entire Delta Team, we wish you and your loved ones joy and peace this sacred holiday season.