Where to look for investment growth

Investing is never cut and dry, so seek out a trusted financial professional for advice and do some research.

Since the election of Donald Trump in November, US stocks have surged to all-time highs, and the S&P/TSX Composite index isn’t far off. The US Federal Reserve raised their base rate 0.25 per cent as expected and indicated the potential for some additional increases to come in 2017. Their cautious, yet generally positive, economic statement follows a slew of improving data. This includes better-than-expected manufacturing growth, growing consumer confidence and solid payroll gains. Plus, with their unemployment rate now at 4.7 per cent, when it has hovered around five per cent for the past year, it is at a level many economists consider to be full employment.

In its statement, the Fed noted that inflation is “moving close to their two per cent longer-run objective,” but that “excluding food and energy prices, inflation was little changed and continued to run somewhat below two per cent.”

Inflation has started to show signs of increasing after running below the Fed’s two-per cent target for years. The personal consumption expenditures price index, the Fed’s preferred measure of price inflation, increased 1.9 per cent in January from the year before. Another measure of inflation, the Consumer Price Index, rose 2.7 per cent year-over-year in February. They also reiterated that based on their balance of risks statement, “Near-term risks to the economic outlook appear roughly balanced.” This means that they expect the economy going forward will be more to the upside than the downside.

So what does this mean for investors? There is a general consensus among fund managers that there is greater upside growth potential to US and global stocks, as well as here in Canada and in to a lesser extent in Europe. Market participants have no idea whether the Brexit will be hard, soft or somewhere in between. There are always correction concerns around things such as the upcoming US debt ceiling increase, current high stock valuations, other global unknowns, etc.

There is a lot of noise out there that now is a good time to rebalance, especially into US (the equity market performance, postelection, really reflects an optimism about growth), as well as global equities, as there doesn’t seem to be any significant global recessionary indicators on the horizon. The US consumer rather than exports seem to be driving US growth as housing starts are trending up driving the expanded manufacturing growth.

Here in Canada, banks and consumer staples are doing very well, plus growth in farm receipts and industries other than energy are helping boost our economy. In Asia 20 per cent growth in manufacturing receipts is driving their economies, especially in Korea.

Bond markets have priced in two rate increases already, with a third one possible and rising equity valuations hurt bond yields. Our dollar will be less a petro dollar and have greater linkage to the US dollar and the Fed interest rate. Oil will bounce around $45 to $55 for the foreseeable future due to a continuing surplus globally, plus with fracking, the US can very quickly increase their supply if prices rise above these levels.

Investing is never cut and dry. There are so many variables to consider such as your risk tolerance, how many years until retirement and the diversity of your portfolio. So, as with all things related to investments, seek out a trusted financial professional for advice and do some research, as it is always good to understand your options.

 

Just Posted

Update on fatal shooting near Stettler

Police say officer dragged before shooting

Watch: Gravel truck turns into wrong off-ramp at Highway 2 Ponoka

The new Highway 2 and Highway 53 intersection at Ponoka caused some confusion for one driver

Stettler armed robber convicted in court Oct. 12

Jayson Marshall gets over two years in jail

CORRECTED Donalda Creamery plans on tap Oct. 23

Architects to answer public’s questions about plans

WATCH: ASIRT investigating officer-involved shooting during crime spree

Shots fired on two occasions during incidents, one suspect remains in hospital with serious injuries

VIDEO: Tragically Hip singer-songwriter Gord Downie dies at 53

Downie had been fighting brain cancer for over a year

Amazon gets 238 proposals for 2nd headquarters

Submissions were due last week. Online retailer has said tax breaks and grants would be factors

WATCH: 10,000 signatures gained to stop ‘no pets’ rental policy

Pets OK BC said about 1,700 animals were surrendered to the BC SPCA last year due to housing issues

VIDEO: Oprah Winfrey and a celebrities attend ‘B.C. Miracle Concert’

Fundraiser featured Foster, Steven Tyler, The Tenors, Matteo Bocelli, Laura Bretan, Carly Rae Jepsen

Search ramps up for B.C. woman after dog, car found near Ashcroft

Jenny Lynn Larocque’s vehicle and dog were found in Venables Valley, but there is no sign of her

Police officer hit by car, stabbed in Edmonton attack back on job

Const. Mike Chernyk, 48, returned to work Thursday

Berry disappointed: Bear tries to eat fake fruit on woman’s door wreath

A Winnipeg woman has taken her berry-embellished wreath down, after a hungry bear visited her porch

All three victims identified in Fernie arena ammonia leak

Wayne Hornquist and Lloyd Smith were from Fernie and Jason Podloski from Turner Valley, Alta

4 B.C. prisons install body scanners to combat drug smuggling

The scanners are aimed to combat the smuggling of contraband including weapons and drugs

Most Read


Weekly delivery plus unlimited digital access for $50.40 for 52 issues (must live within 95 kilometers of Stettler) Unlimited Digital Access for one year for $50.40 Prefer to have us call you? Click here and we’ll get back to you within one business day.