Darren's Blog

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July 2017 Market Commentary from Darren Brennan

 

Economic Outlook

 

The economic data continues to support the renewed investor optimism that took hold right after Trump’s stunning victory last year. Moreover, while the current economic expansion and equity bull markets have both been around since 2010, it is important to remember that healthy economies and bull markets don’t die of old age. In other words, just because things have been improving for a while does not mean that we are due for a recession or a correction in the stock markets. In fact, you could make the case that the American economy was held back over the last 8 years and never reached its full potential, and now we finally have a pro-growth President, whom I believe can unlock the true power of our economy. I think that our continued economy expansion could grow stronger under Trump, which shouldn’t be a difficult task considering Obama and company left us with the weakest economic expansion since WWII. In addition, if Trump can push the economy into high gear, I think the stock market could continue its upward trajectory, and after last November’s election, I am done underestimating Donald Trump. However, I am still underestimating the majority of the GOP, which is once again showing their ability to shoot themselves in the foot all the while controlling Congress.  

 

Economic Outlook

The economic data continues to support the renewed investor optimism that took hold right after Trump’s stunning victory last year. Moreover, while the current economic expansion and equity bull markets have both been around since 2010, it is important to remember that healthy economies and bull markets don’t die of old age. In other words, just because things have been improving for a while does not mean that we are due for a recession or a correction in the stock markets. In fact, you could make the case that the American economy was held back over the last 8 years and never reached its full potential, and now we finally have a pro-growth President, whom I believe can unlock the true power of our economy. I think that our continued economy expansion could grow stronger under Trump, which shouldn’t be a difficult task considering Obama and company left us with the weakest economic expansion since WWII. In addition, if Trump can push the economy into high gear, I think the stock market could continue its upward trajectory, and after last November’s election, I am done underestimating Donald Trump. However, I am still underestimating the majority of the GOP, which is once again showing their ability to shoot themselves in the foot all the while controlling Congress.  

Stock/Bond Report

The world stock markets continue to rally based on a positive outlook for the American economy. While the rising tide of our economy cannot lift all of the world’s economic boats, a stronger American economy is generally better for the entire world. For the second half of the year, I doubt we will see the type of returns from U.S. equities like we saw in the first half, but I do think stocks should continue to rally, especially if Trump gets his tax cut package passed. 

 

 

 

Bond values have come under pressure lately as the yield on the 10-year Bond has been slowly moving up. I think bond values will remain under pressure, but I don’t expect a rapid rise in interest rates that would really cause serious pain in the bond market. Instead, I think yields will slowly rise as the Fed slowly raises interest rates in the coming years. For a little bit of perspective, the bond market did not fall apart despite the Fed raising rates 3 times in the last 18 months. In fact, the yield on the 10-year Bond is lower today than it was when the Fed started raising rates in December 2015, which is why I think the bond market will survive the current cycle of the Fed raising rates.

Just a Thought

 

 

 

“Watch with glittering eyes the whole world around you, because the greatest secrets are always hidden in the most unlikely places”

-Roald Dahl, writer

 

 

 

The views expressed are not necessarily the opinion of FSC Securities Corporation, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investing is subject to risks including loss of principal invested. Past performance is not indicative of future results.   This material contains forward looking statements and projections.  There are no guarantees that these results will be achieved. No investment professional or strategy can accurately predict market performance. The bond market involves risk. In general, when interest rates go up, bond values go down and vice versa, and this effect is usually more pronounced for longer-term securities. No investment strategy can guarantee a profit or protect against loss. **Guarantees are subject to the claims paying ability of the insurance company.

 

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Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. Depending upon the municipal bond offered, alternative minimum tax and state/local taxes could apply. Generally, municipal bonds generate tax-free income, and therefore pay lower interest rates than taxable bonds. Therefore, municipal bonds may not be suitable for all investors. Please see your tax professional prior to investing.

 

There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. The price of commodities, such as gold, is subject to substantial price fluctuations over short periods of time and may be affected by unpredictable international monetary and political policies. The market for commodities is widely unregulated and concentrated investing may lead to higher price volatility. Sales of CD's prior to maturity may result in loss of principal invested. Federal deposit insurance generally covers deposits of up to $250,000 in the aggregate for each depositor in each bank, thrift, or credit union. A customer should ensure that purchasing any insured CD will not bring his or her aggregate deposit over $250,000 FDIC insurance limit. Investors should be aware that there is no FDIC insurance coverage for any principal losses that may be incurred.

 

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January 2018 Market Commentary
June 2017 Market Commentary

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