The global markets stalled during the latter part of the summer, but have now reclaimed their footing. We are continuing to get confirmation of a global economic recovery and the markets outside of the US have continued to lead us higher. This is in drastic contrast to what we have experienced in the last five years, as the US market has pulled everyone else higher. But, we believe it’s also a healthy trend as most non-US markets now trade at a pretty heavy discount to the US.
There are a few trends we think bare watching as we move forward.
The markets are trending higher right now and we feel there is global economic justification as to why. But, we are starting to get some short-term extremes coming into play. So, we have a raised eyebrow as to how far we run? We are encouraged by the global economy, but as always, we will not throw caution to the wind and will continue to monitor the markets for warning signs.
The markets have stalled a bit late in the summer but, as we have been communicating for the last several months, we have been expecting a corrective phase. It’s been well over a year since the stock market went through a normal correction and stocks have looked “tired” for the last several months. As well, August and September tend to show poor seasonable performance.
Moving forward, there are two economic question marks that will determine the longevity of this economic expansion in the coming quarters and years:
Keep in mind, we have not turned bearish on the markets, we simply feel that the markets are in the process of taking a breather. In reality, the global economies are lifting right now and earnings have been strong. This is a very positive scenario and one we think will push markets higher over the coming years.