There is some ominous news around of ebola virus spreading fears. It is improbable that such fears will manifest as any sustainable problem, however there is good reason for people to monitor the issue. There is some good news from China with growth in manufacturing. The job growth in the US was not as positive as expected, however we remain in a low interest rate environment, and the global context is largely stimulatory, even if economic activity is largely flat. The lack of spending is really just a concern that needs to feed its way through the economy. People are not going to start spending until skilled labour see wage gains, and then this will give unskilled wage earners more confidence despite 'wage restraint' at their end.
At the same time, strong employment and wage growth in the emerging markets mean these economies are going gang-busters. Its really just a patience game waiting for the economy to recover. The question is what will equities do in the meantime. I'm inclined to see the current sell-off as just a temporary correction. Using charts, I'm expecting a fall in the US S&P500 back to 1880 points, and a restoration of the rally. I'd not expect to see a collapse in earnings, and since yields are not overly high, then I'd expect more upside. You can however expect a bursting of high asset prices (including equities) at some point. In fact, I'm expecting a succession of 'small bursting bubbles' before a final 'serious burst' when we see higher interest rates.
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At the same time, strong employment and wage growth in the emerging markets mean these economies are going gang-busters. Its really just a patience game waiting for the economy to recover. The question is what will equities do in the meantime. I'm inclined to see the current sell-off as just a temporary correction. Using charts, I'm expecting a fall in the US S&P500 back to 1880 points, and a restoration of the rally. I'd not expect to see a collapse in earnings, and since yields are not overly high, then I'd expect more upside. You can however expect a bursting of high asset prices (including equities) at some point. In fact, I'm expecting a succession of 'small bursting bubbles' before a final 'serious burst' when we see higher interest rates.
Source: Google Finance
There is another reason to expect higher equities. There is a great deal of Chinese and Japanese money that it destined to pursue foreign markets. i.e. Japan bonds will experience a sell-off in favour of higher-yielding growth assets. The same for China. This will raise interest rates somewhat, but there will be a corresponding rise in economic growth.
In the chart above, I'm expecting a large drop in equities to 1880 points on the S&P500, however I'd expect it to recover strongly in intra-day trading.
Asian property markets outperforming Japan Foreclosed Guide Philippines Property Guide
Profit from mining with Global Mining Investing eBook
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