After a dip and recovery yesterday, the markets were down this morning. It is clear that the developing situation between the U.S. and North Korea is rattling financial markets. Should we be worried? If so, what should we do?
Brad McMillan, Commonwealth’s CIO, recaps another great month for the markets and economy. In July, U.S. and developed markets were up, due to the simple fact that companies are making more money. Earnings came in much better than expected, U.S. job growth was strong, and wage growth picked up. Plus, both consumer and business confidence are on the rise. Clearly, there is positive momentum going forward. But with slow spending growth and a pullback in business investment, are there clouds on the horizon? Stay tuned to find out. Follow Brad at blog.commonwealth.com/independent-market-observer.
It seems like just a couple of months ago that I was writing about record highs for the Dow. In fact, looking at the data, it was only a few months ago, on January 26, that I wrote about Dow 20K. Reviewing that post, it notes that I last discussed stock market records 58 days before that. Are we seeing a pattern here?
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There’s an important—and potentially very disruptive—issue that has been largely ignored during coverage of the health care debate. The U.S. government hit its borrowing limit on March 16, 2017. Yes, that’s right—the U.S. borrowed as much as it legally can four months ago.
Valuations continue to reach new highs, and the market looks very expensive—by some measures, the third highest of all time after 1929 and 1999. Meanwhile, the economy is showing signs of slowing.
When looking at the stock market, one of the key things we should focus on are earnings, as they represent the bedrock of a stock’s value. The best way to value stocks—the dividend growth model—analyzes earnings, growth rates, and required returns to determine what a stock is worth fundamentally.
Market risks come in three flavors—recession risk, economic shock risk, and risks within the market itself. Using a red light/yellow light/green light system, this monthly post explores the risk level in the markets, based on a number of factors.
The data for June was generally positive, with a rebound in job growth and a surprise increase in business confidence supported by continued high levels of consumer confidence.
Brad McMillan, Commonwealth’s CIO, discusses the markets and economy in June. It was a good month, with consumer confidence and business confidence remaining strong. The Federal Reserve raised rates and seems likely to keep doing so. Plus, growth is accelerating around the world, from Europe to China. But here’s the problem: Both consumer spending and business investment are not growing as much as expected. So, are we going into a typical summer slowdown or are we looking at slower growth going forward? Stay tuned to find out. Follow Brad at blog.commonwealth.com/independent-market-observer.