A June Overview

The markets have been running up recently, primarily on the back of strong performance from the technology sector.  The summer months tend to experience lower levels of trading, so we would expect a bit more volatility during these months.  But, there are a few trends we are seeing that define the markets move up:

  1. We are finally getting economic growth from the rest of the world.  For the last eight years, it has been the US, and everybody else.  Our economy has pulled the global economy higher.  However, in 2017, we’re starting to see much better growth coming from places like Japan, Germany, Spain and even the UK.  If these countries continue to participate, we have a chance for a sustained market run.
  2. Rates are still rising.  The FED raised rates for the second time recently and we expect one more hike before year end.  Typically, rising rates curb economic growth.  However, since we’re starting from such a low level, it will be a long time before the level of rates dents our economic growth.

As mentioned, we would expect the markets to level off and even potentially correct in the next couple months.  But, we also feel that any correction in this time frame will give way to higher prices by year end.  As such, we’re exploring ways to capitalize on any market weakness in this time frame.  

A May Overview

After a three-month reprieve, the markets look as though they have found their footing.  Domestic and most international equity markets have moved to new highs.  Interest rates have stayed relatively low and this has acted as a catalyst for investors.  There are a few things that stand out to us about this market and the global economies:

  1. Europe has overtaken economic leadership from the US.  In the first quarter of 2017, Europe’s economy grew at an annualized 2% rate, which outstripped the US economy at 0.7%. It’s good to see that Europe is finally picking up steam. 
  2. A wide disparity in interest rates exists around the world.  In the US, the FED has started raising rates and will diligently continue raising for the foreseeable future.  In Europe, the EU has kept rates down. This trend may change if Europe continues to improve.
  3. Unknowns remain with the new administration.  President Trump is attempting to lower tax rates and it appears the domestic equity markets are pricing that in.  If rates are not reduced, it could cause a dip in stocks. 

We are encouraged by what we see in the global economies.  For the first time in a long time, the rest of the world seems to be waking up.  This type of global improvement could help sustain growth and create a more consistent environment for development. 

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