The bull market continues to march higher. The S&P 500 Index is near one of the most overbought levels in history and this has many wondering how much longer the rally can continue. The longer-term technical indicators continue to look strong, but sentiment is flashing some warning signs suggesting market volatility could finally be heating up.
With the end of the year fast approaching, ‘tis the season for reflection on forecasts past and the sharing of forecasts future. We do not have an award for “Forecast of the Year,” but if we did, in 2017 it would go to the Federal Reserve (Fed). While the Fed’s “dot plots” are not a forecast strictly speaking, it’s fair to take the median dot as a rough consensus view. With its rate hike last week, the Fed hit its mark of three hikes in 2017, matching the view set out in its final set of dot plots in 2016. With the economy surprising to the upside, the Fed was able to follow through on its expected rate hike path in 2017, and begin to reduce its balance sheet.
Jim Nabors, who played the bumbling but lovable Gomer Pyle in The Andy Griffith Show and subsequent spinoff Gomer Pyle, U.S.M.C., passed away on November 30. Inspired by a couple of Gomer Pyle’s catch phrases, this week we look at some recent strength in economic surprise indexes that hit multi-year highs in November. These new highs might have led Gomer — if he were an economist instead of a filling station attendant and then Marine Corp private — to say, “Surprise, surprise, surprise!”
Companies remained generally upbeat during the third quarter earnings season, based on the LPL Research Corporate Beige Book Barometer. This is hardly surprising, given actual earnings results were good again and estimates of future earnings held up relatively well as companies provided forward-looking guidance.
Back to business: fundamentals to drive stock market gains in 2018. With a focus on business fundamentals and the impact of fiscal policy, the return of the business cycle means that earnings growth may have to shoulder most, if not all, of the load if stocks are going to produce attractive returns in 2018.
The good news is the S&P 500 Index may be well positioned to generate earnings growth at or near double-digits in 2018 thanks to a combination of better economic growth and potentially lower corporate tax rates, despite some possible downward pressure on profit margins from higher wages.
Gold for Illinois
I am proud to announce that we've made historic advances in our college savings plans.
Illinois’ Bright Start and Bright Directions are the highest rated programs in the country, according to an independent analysis by Morningstar.
Bright Start earned a gold rating. It is the first time the college investment fund received that honor.
In late October, Bright Directions earned a silver rating for the second consecutive year, the highest rating for an advisor-sold plan.
Morningstar evaluated plans in nearly every state in the country and based its ratings on five key pillars: process, performance, people, parent, and price. The restructuring of Bright Start’s investment portfolio and a significant reduction in fees specifically was mentioned in the analysis.
This great news is a direct result of the feedback that we have received from our college savers. Today, we have more than 460,000 active college savings accounts valued at more than $9 billion.
Attending college or a qualified trade school is a key component to career success. How many times have we heard a parent say, ‘I just want my child to have a better life than me.’
Opening a Bright Start or Bright Directions college saving account is the first step.
Michael W. Frerichs
Illinois State Treasurer
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
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