Sunday, July 2, 2017

Stock Market: Will The Second Half Of 2017 Be As Good As The First?

(Drivebycuriosity) - So far the year 2017 confirmed my optimistic posts from year begin (another-year  reasons  ). The US stock market finished a strong first half-year and continued the upwards trend since March 2009. The SP 500, the gauge for the US stock market, gained 8.2% year-to-date.

The gains were caused by the economic fundamentals: As I had assumed Europe is doing better than the pessimist majority had expected, China is still growing with a rate of more than 6% annually - refuting the China crash callers -, the US economy is muddling along & company earnings are rising again. All positive trends have been contributing to the recent rally, which started last November after a consolidation break of about 18 months.

I think the second half of 2017 could be as strong as the first, disappointing the pessimist majority again. Companies are benefiting from a growing global economy - especially the recovery in Europe & the rise of the emerging market. They are selling globally more products & services which is translating into higher profits. The global economy is still getting a lot of tailwinds from cheap commodities and relatively low interest rates (even if the Fed will continue her moderate interest rates as announced).  I also believe that the technological progress is stimulating the economy and promoting globalization. Emerging countries like China and India have easier access to new technologies which is encouraging their transformation into modern economies. These processes are working together, creating global economic growth in the decades to come.

If the Trump administration manages to start the announced tax cuts & infrastructure investments the stock market should get an additional boost. Anyway, the new government is more business friendly than the former which is positive for the economy, stimulating company earnings & the stock market.


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