We are cautiously optimistic when looking forward over the next 12 months. Although we have seen some reasons to be concerned, we still look for continued expansion in the US economy.
We think we will see a continued period of elevated volatility in spite of the corporate earnings environment which has been supportive of current price levels. The tumultuous political year seems, for the moment, to be behind us. The business friendly administration indicates a push to higher levels in the equity market. Promises of lower corporate and personal long term tax rates are a key reason we believe the markets will respond positively through the balance of 2017. In addition consumer confidence has been bolstered by strong labor market date. The jobless claims remain low (even when factoring in those who have left the job search market). CEO confidence is also rising, and both the manufacturing and non- manufacturing indices rose.
CEO confidence is also rising, and both the manufacturing and non-manufacturing indices rose. Of course many things could derail this momentum.
Of course many things could derail this momentum. Interest rates increases seem to be priced into the market, but many other possible pitfalls lie ahead. The new administration will have to work diligently to avoid scandal, as well as geopolitical strife which we see as having potentially enormous negative consequence. We have observed that overall market consensus has pegged US growth to be between 1.5-2 percent in 2017, which is certainly possible given the significant issues facing the new administration. In spite of the growing debt we feel that higher interest rates and global uncertainty will not be enough to completely January 2017 derail the momentum that we are currently experiencing.
Disclosures: Views are as of 1/04/2017, and are subject to change based on market conditions and other factors.These views should not be construed as a recommendation for any specific security or sector. Neither asset allocation nor diversification assure a profit or protect against a loss. The data provided is for illustrative purposes only and is not representative of performance of any particular investment. Past performance is no guarantee of future results. The information contained herein has been obtained from sources believed to be reliable but the accuracy of the information cannot be guaranteed.
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