November/ December Year End Commentary – Brian L. Kasal, Chief Investment Officer – FourStar Wealth Economy
THE STUBBORN ECONOMY
We saw preliminary GDP for the third Quarter at 1.5%, and we should have at least two more revisions. There was a mixed bag of input with housing slowing a bit, but then picking up. Energy is very slow and Manufacturing is staying in advancing territory. Our economy is the Stubborn Economy that isn’t big in the growth department, but it just doesn’t seem to die!
China continues also to be slow and messy, yet the US Federal Reserve has signaled with recent comments that a rate increase is still very possible in December and are basically saying the increase is likely.
Signaling is what markets often do, markets ride and economies get better. The markets are a discounting mechanism and a leading indicator. October was one of the best up months in many years in the financial markets. Recall, October normally has a reputation for negative headlines and market crashes, yet the market signals point to a better economy.
The Long term market is never surprising and follows well-worn patterns, but the short term is often surprising. This month has been surprising.
We have been defensive since the signals we got in June thru August. We may see more choppiness in the near term, even though we are constructive on the long term.
THINGS TO BE WORRIED ABOUT
High yields are attractive to investors. OUTRAGEOUSLY HIGH YIELDS ATTRACT FOOLS. Many people are invested in things that offer much more risk than they realize and we caution them to have a look at that and review what potential risks they are being exposed to.
We will be back with our view on 2016.