Welcome to the newest year of disruption – its challenges, risks, rewards and investment opportunities! But how different this time compared with a year ago when hopes for the U.S. and its freshly-triggered animal spirits were heavily outweighed by generally sobering forecasts.
The graphic from the Globe and Mail succinctly illustrates the ‘Animal Spirits’ in the 2017 North American stock markets. Enjoy the detailed discussion by Dr. Michael Graham, Ph.D. 2018 Challenge, Disruption, Opportunity.
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2017 was a good economic year. “The world’s largest economy, the U.S., seemingly got back its mojo, while export powerhouses such as the Eurozone and Japan are on track to register above-potential growth courtesy of buoyant global trade. Emerging economies too likely grew faster than the prior year thanks to trade but also to stimulative policies. Slightly higher inflation could have some central banks tighten policy somewhat in 2018, although that’s unlikely to be enough to prevent a repeat of this year’s solid growth performance.” Our partners at National Bank Financial Economics offer a balanced view of 2017 and a positive but guarded perspective for 2018.
U.S. Stock Market Indices move to new highs in part driven by earnings and the anticipation of U.S. tax reform or at least tax cuts against modest inflation increases. This optimism is due in part to the underlying economic conditions in Canada and the U.S. economic remain positive. The focus is and will be on inflation trends. Both the American and Canadian consumer price indexes (CPI) ticked upwards due in a large part to energy prices recovering.
North American Inflation Trends
In Canada, all eyes will be on September’s Gasoline prices rose 4.4% in the month, way above historical norms. The headline CPI expects to increase 0.3% and push the annual inflation rate up three ticks to 1.7%. The backdrop of this modest inflationary pressure is against the very strong first six months of GDP growth in the Canadian economy.
The U.S. September CPI increased 0.5%, following a 0.4% advance the prior month. The headline figure was lifted by a 6.1% spike in the price of energy, the steepest monthly increase for that category since June 2006.
An update with a difference as investors watch a day time poltiical drama unfold at the midpoint of 2017. These distractions may create a diversion from the underlying realities that world economies are generally strengthening overall. Michael Graham Investment Services (MGIS) offers a fulsome and entertaining review of current global economic conditions. MGIS declares that the spontaneous growth is potentially the best synchronized world growth since 2007-08, if not in decades.
2017 Midpoint Canadian Equity Six Pack
MGIS offers insights and ideas based on the economic environment within this global growth content.