Market conditions and recent world events have precipitated a tangential, and appreciable increase in market performance which is by this writers estimates expected to last well beyond the end of the 4th quarter of this year, and be extended well into the 1st quarter of this year. There are a number of driving factors for this phenomenon. Low unemployment, a recovery in the housing markets, inflation being held in check, recovery of overseas assets, and recent shifts in Federal Reserve policy. Unemployment continues to hover around pre-recession levels(4.9% October 16’) and is expected to continue to deliver good news well into the new year as wages for workers continue to rise with private industry compensation increasing 2.3% year over year. The housing markets are no longer at risk of collapsing as new banking regulations which have taken effect worldwide have produced an appreciable measure of confidence in both developed, and developing economies. As for the United States, the low levels of inflation(CPI 0.4% October 16’) have helped to strengthen the Dollar worldwide, and buoy disposable income for U.S. households, along with low household debt, this has afforded U.S. consumers a greater degree of purchasing power along with an increase in average hourly earnings(+$0.10 October 16’) leading to an increase in margins for retail, technology companies, and small businesses. For domestic international suppliers the introduction of new banking and asset reserve requirements for both U.S. domestic, as well as international banks has led to a global recovery which has taken hold and been much more durable in the U.S., as compared to European, and Asian Markets. This is not to downplay the very real recovery in overseas assets, however there is still the possibility of weakness in overseas markets, particularly in Western Europe, Japan, China, and other developed Asian economies which could lead to a weakening in both U.S. domestic Equities, as well as the overall economy. As for Federal Reserve Policy, the uneasiness of Federal Reserve policy should abate as a new incoming American Presidential Administration will bring about a change in the leadership for both monetary and fiscal policy. However this change is not expected to pull back growth in U.S. equities but rather expand a rally which has commenced since before U.S. elections were held in early November. This notwithstanding the expectations for current policy in regard to the current administration are for their to be no deleterious actions either fiscally or monetarily speaking in either November/December, or January. That is to say all Federal Reserve interest rates will remain unchanged. However their will also not be any action on the Transpacific Trade Pact or TTP which with the new administration is expected to be dead on arrival.
Insight: Dow Jones Indices ending December 30th, 2016 are expected to be at 20,020. With DowIndices expected to top in excess of 24,938 ending December 29th, 2017