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An Improving Economic Outlook Ahead and Rising Stock MarketsSubmitted by Integrity Advisory on November 29th, 2016
Overall, global stock markets have had a strong showing over the past month. Some of that is due to no longer dealing with the uncertainty of U.S. elections, but also an increasing amount of good economic news has people believing the glass is half full as it relates to the economy and stocks.
The Organization for Economic Cooperation and Development (OECD) reported last week that the rate of economic growth in developed countries doubled in the three months to September, which is an indication that the global economy may be set for a modest pickup.
The third-quarter rebound was led by the U.S. and Japan, and marked the fastest rate of quarter-to-quarter growth since the first quarter of 2015. For 2017, the OECD and other international bodies expect a modest acceleration in global economic growth.
Minutes from the Federal Reserve’s November meeting show that the Fed was looking for signs of an improving economy before raising interest rates in December. Since that meeting there has been a steady stream of positive economic news and a brighter consumer outlook. As such, chances of a December rate hike seem overwhelmingly likely. However, the U.S. economy and investors seemed prepared for this.
As a matter of fact, some institution investors have reported that big piles of cash have begun to make their way into the stock market. It appears that in the near term, investor sentiment went from wealth preservation to wealth accumulation in the matter of a couple of weeks. As one chief investment strategist noted in the past week’s Barron’s Magazine, “Do not underestimate the value and amplifier of animal spirits. Animal spirits, once unleashed, can be pretty super-fantastic economic additives.”
In layman’s terms, positive investor and consumer sentiment can be a huge catalyst for an improved economy and stock market. Bottom line, I hope we are on track for a Santa Claus rally for stocks through the remainder of this year. That would be a great present. Unfortunately, bonds are not reacting as positively since stronger economic growth results in higher interest rates, which is the equivalent of a lump of coal in the near term. Overall, when you factor in all that is occurring with the economy, stock and bond markets bodes well for investors.
Doing Good and Having Fun
Integrity Advisory staff, clients and friends all pitched in to help at Harvesters Community Food Network last Wednesday. It was a nice turnout, and everyone pitched in sorting food items for those less fortunate. The following are some pictures of all those in attendance. I want to thank everyone for their hard work and giving spirit. You made it a very fun opportunity to serve others, as well as, work up a big pre-Thanksgiving appetite!
“The ultimate in longevity is the Christmas fruitcake. It is a cake made during the holidays with fruits that make it heavier than the stove it is cooked in.”
“Anyone who believes that men are the equal of women has never seen a man trying to wrap a Christmas present.”
Quotes selected by the IAG staff
“Helping others is the secret sauce to a happy life.”
“Great things happen to those who don’t stop believing, trying, learning, and being grateful.”
Roy T. Bennett
Tony Moeller, CPA
The information listed in this commentary is a compilation of various publicly available sources and is for informational purposes only. It is not a recommendation or solicitation of any particular investment or strategy. A risk of loss is involved with investments in the stock and bond markets.
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