Yesterday’s news that the Democrats won the Alabama special Senate election, for the first time in 25 years, rattled U.S. politics. By taking the Republican majority in the Senate from 52 to 51, it reduces an already tight margin for difficult votes.
I have been wrestling with what to write about today. There’s not much to add that is new. The economy is doing well, and the data is coming in strong. Although the stock market is reacting to events in Washington, it is still within 1 percent of its all-time highs. From my beat, there is not a lot worth commenting on at the moment.
Brad McMillan, Commonwealth’s CIO, recaps a month of good news for the markets. In November, U.S. financial markets were up across the board, and developed markets rose substantially. Hiring continued to do well, personal income grew, and consumer confidence rose to the highest level in 17 years. Plus, business confidence improved more than expected, and business spending was up. Given all of these positives, do we need to worry about political uncertainty in Washington, including the debt ceiling? Stay tuned to find out. Follow Brad at blog.commonwealth.com/independent-market-observer.
As I have been saying, things are pretty good, economically speaking, as we approach the end of the year. At the same time, there are some significant risks in the next couple of weeks that we need to keep an eye on.
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Many of us were under the assumption that we could go into the holiday season with Europe pretty much checked off the risk list. The economic news is good and getting better, and the major elections that have caused so much angst have passed. Not so fast, bub.
With the passage of the House’s tax reform bill, the Republicans have moved significantly closer to one of their key political goals. Of course, the Senate bill still needs to pass that chamber, and then the reconciled bill must pass both chambers. But the fact that the fractious Republican factions in the House have come together is a signal that passage is a real possibility.
I am really coming to grips with my 2018 outlook, and I find myself wrestling with the implications of slowing growth on the economy and, in particular, the markets. The fundamentals have been strong, with good earnings growth driving the markets up.
Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for November? Let’s take a closer look at the numbers.
It has been a busy couple of days in the news. So, while I don’t ordinarily quote Lenin, his statement that “there are decades where nothing happens; and there are weeks when decades happen” is just too applicable to ignore.