It's been a happy new year for markets so far in 2017. Will it continue?
In this week's episode, Director, Client Investment Strategies, Mark Eibel joined Todd LaFountaine, program director, advisor insights, to take a close look at the first week of market activity in 2017 and projections for the coming months.
Eibel called the recent positive reaction of U.S. equity markets a "honeymoon period," and noted that U.S. markets tend to rise between presidential elections and actual presidential inaugurations. Eibel encouraged investors to focus more closely on data and market fundamentals.
That data includes U.S. non-farm payroll jobs numbers for December, which came in at approximately 156,000 - a solid number from Eibel's point of view. U.S. wages also moved up, and markets seemed to have responded positively to those data points. On the more negative side, the relatively high valuation of U.S. equities may be creating more of a headwind for continued market growth.
Non-U.S. equity markets: Another honeymoon?
Around the globe, both developed and emerging markets are also having a good start to the year. Eibel noted that the valuations of equities in these markets are comparatively lower than U.S. equities. Looking forward, Russell Investments strategists predict eurozone equities to have earnings growth potential in the 5-10% range for 2017. Additionally, the currencies in many of these markets are weaker than the U.S. dollar, making their exports less expensive as well.
What happens once Trump is sworn in as president?
Eibel noted that President-elect Trump will soon become President Trump. The moment that happens, the markets will begin paying close attention to his ability to fulfill the campaign promises that seem to have helped move U.S. markets up. Eibel stated that the potential for disappointment may also create a potential for a downward market move.
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Date of first use: January, 2017