Dear Clients and Friends,
Here are my latest thoughts on the markets for your review:
The 2018 outlook will be complex; it will require thoughtful acumen and a global perspective.
As we enter the new year, I am positive on the Global Equity Markets amid strong economic growth and little evidence of a downturn, as a recession still seems to be 1-2 years out.
US Equities: A lower corporate tax rate, repatriated foreign cash, and likely share buybacks could further fuel a rise in profits, which will provide opportunities for higher returns in 2018. The S&P 500 could see EPS growth of 12% to $151/share, or 2,870.
International Equities: In spite of political uncertainty, I am positive on International and Emerging Markets. These should be an integral part of equity
Bonds: As we enter 2018, we will see higher volatility and bond yields, as monetary policy tightens. Bond yields (10-year Treasury) could rise to 2.8% – 3% due to
higher GDP and inflation.
Oil & Commodities: I expect oil prices to move sideways and stay in a range of $55 to $65/bbl. Inventories are running 10% above normal levels and should provide a
cushion if supplies fall. Commodities seem to be bottoming out as firm demand growth should provide higher prices into the future. A weaker USD and renewed inflation pressure should act as a tailwind moving forward.
Risks: Political events and policy uncertainty pose a threat to investors in 2018, as financial markets will experience greater turbulence and corrections. A likely shift towards tighter global monetary policy will boost market volatility. It is likely that there will be a market correction which may happen early on, or could possibly unfold over the summer, but it would be advantageous to use any correction as a buying opportunity.
As always, please feel free to contact me should you have any questions.
Have a happy and healthy holiday!
54 Oak Street, Ridgewood, NJ 07450