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- The US market has hit new highs and recovered from the lows of 2008, despite some economic and political risks. Returns have been positive but modest in 2014 as markets digest previous gains.
- The Federal Reserve's stimulus programs have been effective, with unemployment falling and job growth rising, and inflation stable. The Fed will end bond purchases in October as the economy grows steadily.
- If earnings growth continues globally in 2014, investors may build on recent gains, though risks remain like increases in bond yields or geopolitical instability. Overall the economic outlook is favorable for continued growth.
Исходное описание:
Overview and analysis of the markets and economy at the half-way mark of 2014.
- The US market has hit new highs and recovered from the lows of 2008, despite some economic and political risks. Returns have been positive but modest in 2014 as markets digest previous gains.
- The Federal Reserve's stimulus programs have been effective, with unemployment falling and job growth rising, and inflation stable. The Fed will end bond purchases in October as the economy grows steadily.
- If earnings growth continues globally in 2014, investors may build on recent gains, though risks remain like increases in bond yields or geopolitical instability. Overall the economic outlook is favorable for continued growth.
- The US market has hit new highs and recovered from the lows of 2008, despite some economic and political risks. Returns have been positive but modest in 2014 as markets digest previous gains.
- The Federal Reserve's stimulus programs have been effective, with unemployment falling and job growth rising, and inflation stable. The Fed will end bond purchases in October as the economy grows steadily.
- If earnings growth continues globally in 2014, investors may build on recent gains, though risks remain like increases in bond yields or geopolitical instability. Overall the economic outlook is favorable for continued growth.
2014 has started of in a reasonably tempered manner, with the Dow Jones Industrial Average, representing large capitaliation stoc!s, returning 1"#$ and the %ussell 2000, representing small capitaliation stoc!s, generating a 2"#$ return during the &rst hal' o' the year" (i)ed income has delivered nominally positive returns, and international mar!ets have been mi)ed with slightly positive returns as well" All in all, the mar!ets have been digesting and consolidating the strong gains o' 201*, and ad+usting to some o' the geopolitical and economic ris!s that have sur'aced so 'ar this year ,-!raine, the economic slowdown in .hina, continued /iddle 0ast volatility1" 2he (ederal %eserve3s economic stimulus program has been efective, as evidenced by the -"4" unemployment rate 'alling to 5"1$ in June, a &ve year low, +ob growth has been running at over 200,000 newly created monthly +obs since last summer, in6ation has been stable at around 1$, and ma+or stoc! indices have been hitting new highs" 7ighlighting the economy3s growth tra+ectory, the (ederal %eserve has noted it will end its bond purchasing program as scheduled in 8ctober, and has issued an open ended, cautiously optimistic assessment o' the state o' the -"4" economy" 2he long9awaited (ederal %eserve December tapering announcement arguably represents a turning point 'or many global capital mar!ets" A level o' uncertainty has been removed 'rom -"4" monetary policy" 2he taper o' the bond buying program is a signal o' a macroeconomic consensus that -"4" economic growth is li!ely to be sustainable"
I' global earnings growth continues to improve as we move 'orward in 2014, investors may be in a position to build on recent gains" 4peci&cally, -4 earnings growth should continue to 'ollow the mid to high single9digit path o' recent years" :hile 0uropean earnings have remained wea!, they should improve as the 0uropean recovery strengthens"
Developed economies are slowly progressing toward modest but synchronied growth, where consumers gain con&dence and companies shi't toward more hiring and investment" 2he 'avorable outloo! 'or lower energy prices should allow 'or a more sustainable period o' global growth, unli!e the recent past when rising energy prices curtailed potential growth rates" 2hat said, ris!s to this generally 'avorable outloo! remain; we could e)perience some short9term volatility due to a +ump in bond yields" 4peci&cally, as the (ed winds down its bond buying program, it could drive a reduction o' leverage in &nancial mar!ets and lead to increased volatility in asset prices" :e could also see 'urther geopolitical ris!, including volatility surrounding -!raine and the 0astern 0uropean countries, and an escalation o' violence in the /iddle 0ast ,Ira<, 4yria, Israel, =alestine1" :ith ongoing structural issues, 0urope also remains a concern" Summary
2he -"4" mar!et has hit new highs and has completely recovered 'rom its lows in /arch 200>" :hile not a period o' uninterrupted economic and political calm, the bull mar!et has been surprisingly robust and consistent since the summer o' 2011" 2he mar!et currently has limited volatility" %elative valuations are within normal ranges in many cases" 4entiment is a positive indicator; the rally is hated and distrusted, a good sign o' continuation while many retail investors are in cash" %ecently, mergers and ac<uisitions activity has been robust" ?ields are li!ely to be low and stable 'or some time" :hile there are areas o' concern, economic prospects loo! very 'avorable overall" 4tronger growth should generate stronger corporate pro&ts, a li't in con&dence and a more resilient economic environment" 2hough many countries are engaged in a signi&cant transition o' one !ind or another, -4 growth appears to be sustainable and the -4 could serve as ballast 'or the global economy over the ne)t 'ew years" 2he ma+ority o' the world appears to have entered the latter hal' o' the credit cycle, meaning that rising interest rates, moderating li<uidity and increasing corporate leverage could lie ahead" 4toc!s should continue to outper'orm bonds through the end o' this cycle, and depending on how companies manage their capital structures going 'orward, corporate bonds could be poised to outper'orm -4 2reasuries 'or a 'ew more years" 8verall, we may be in 'or a generally good, improving economic and investment climate" I am happy to share thoughts with you in greater detail, and welcome any comments you may have" 2han! you 'or your support" Amin @ha!iani July 1#, 2014
Summary of The Subtle Art of Not Giving A F*ck: A Counterintuitive Approach to Living a Good Life by Mark Manson: Key Takeaways, Summary & Analysis Included