As we kick off the new year, it’s a short week before the next earnings season gets rolling. Oil has climbed above $60 a barrel. Perhaps the biggest story will be the same story we’ve had for the last few years: the Fed. With Yellen’s term expiring, will new Fed chair Jerome Powell deviate from the current Fed course? Is the flattening yield curve a sign of trouble ahead? Will this market ever experience more historic volatility? In short, is something going to kill this bull market run?
In 2017 politics and media sensationalism took a back seat to economic data. The markets simply kept grinding higher. The big unknown is whether or not 2018 will be the same. As mid-term elections draw near, will market participants be pricing in economic changes if the DC landscape starts to shift? Basically, we get to guess on this one for now.
The next thing for markets to pay attention to will be a DC shutdown. We’ve seen it before. In times past they’ve typically been avoided. However, the Trump administration seems more willing to play chicken than some in the past. Certainly, the Republican party would not be accused of being organized and on the same page for the past year. It remains to be seen if the momentum from the passage of the tax plan can be carried forward into the new year.
Economic Highlights
Gross Domestic Product: Economic growth picked up in the 2nd and 3rd quarters, and analysts believe the expansion could continue in 2018.
Labor: The unemployment rate dropped to 4.1% by October 2017, and some analysts believe it could fall even more in 2018.
Inflation: While inflation is below the Federal Reserve’s 2% goal, the most recent readings show a healthy increase. If inflation continues on this path, the Fed will likely continue to slowly increase interest rates in 2018.
If you have any questions about how to prepare for what lies ahead—or want more details on what we expect in 2018—contact us any time.
Quote of the week:
"Every individual matters. Every individual has a role to play.
Every individual makes a difference."
― Jane Goodall
Happy New Year!
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January 02, 2018