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U. S. Financial Summary : An Overview Of The Market?

Decent Essays

Year ahead – More of the same with a few more bumps

Summary o 2017 was another year full of surprises – equity markets globally are much stronger than most expected o Tax reform/cuts, while not loved by everyone, will produce stronger earnings growth for U.S. corporations and leave extra money in consumers’ pockets o Strong earnings growth in the U.S. and internationally, paint a positive backdrop for equity markets in 2018 o More volatility for stocks and a much needed pullback in 2018 – we believe the pullback will be brief and a buying opportunity o Increasing calls for the end of the cycle – we disagree o The rebound in oil prices is a positive for the U.S. economy, not a negative o Fed will continue to raise rates in 2018 o Large …show more content…

economy. The consumer is benefiting from a strong jobs market, stock prices are at record highs, a rebound in home prices and subdued inflation. We would argue that the consumer hasn’t been this healthy in decades. Corporate America is also on sound footing and will continue to benefit from the synchronized global rebound.

Tax reform
The prospect of tax reform has definitely helped push equity markets higher this year and may do the same next year as well. Tax reform will drive high earnings for corporations and leave consumers with more money. We view this as a secondary reason for our optimism, not the main driver for high stock prices.

How long can the run last
This is the number one question we continue to get. Our focus remains on the underlying health of the economy in the U.S. and globally, as well as earnings growth and both are improving at accelerating rates. Barring any unforeseen events we expect 2018 will be another positive year for equities both in the U.S. and globally and believe the expansion could continue for the foreseeable future.

Volatility
One thing we do expect more of in 2018 is volatility. We have experienced a record period of calm in the equity markets over the past 18 months. On average the S&P 500 experiences three five percent corrections and one ten percent correction annually. We won’t be surprised by a five to ten percent

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