A December Overview
The markets are finishing the year on a high note with a return to new highs as the cherry on top for our 2017 markets. There seems to be legitimate reasons for such an amazing run during 2017, primarily driven by the global economies. Moving into 2018, we think there are several themes worth following:
Will the global economies continue to expand? – We actually believe they will. This year appears to be the year the global economies bottomed and started to expand again. Our belief is that the expansion could have several years to run.
How fast will interest rates rise? – One of the main “brush fires” that could turn into a blaze is interest rates. If the economies grow too fast, Central Banks will be forced to raise rates more aggressively, which would put a damper on the economies and markets. We expect the FED to raise rates three times next year. Anything more could put a cap on our markets.
Will we experience post-election volatility? – The first year of the election cycle tends to be very positive, ala 2017. However, the second year tends to experience more volatility with lower gains for the year. We will see if this holds true for next year.
With low interest rates around the world, this economic growth cycle has legs. Eventually, higher rates will slow our growth. But, that is a scenario that may take several years to unfold. So, we don’t want to go to defensive too quickly.
As we reflect on this holiday season, we wish you and yours a very Merry Christmas, good health and prosperity in the New Year.