And that was the year that was.

Last December, we projected a positive year in 2017, and forecast that equities would be solid, and said that we would over-weight equities. We anticipated a stronger GDP, based primarily on our belief that the incoming administration would lighten the reigns on businesses and particularly on entrepreneurs.

So far, so good. It appears that the fourth quarter GDP is at approximately 3%, which would mean 2.7% growth for the 2017 year. (And we’re expecting somewhat better GDP growth in 2018). A 3% real GDP growth in 2018 would be the fastest since 2005.

In recent weeks we’ve said enough about markets breaking records in 2017, so enough about markets. I do note however, that earnings growth for the S&P Companies for 2017 has been about a 7% gain over earnings in 2016, and that projections from those companies for 2018 are expecting greater gains in 2018.  Unemployment has surprised in 2017-  to the DOWNside! It has dropped to 4.1% and may perhaps move even lower in the year ahead. Our sources expect to see unemployment drop to 3.7% which would be the lowest unemployment rate since the late 1960’s!

We were a bit early moving into European stocks and emerging market stocks in Spring of 2017, but amazingly enough both European markets and emerging market stocks outperformed U.S. markets. We remain over-weighted in both areas as we move into 2018. I note that Deutsche Bank Economic Commentary shows that the number of countries expected to be in recession during next year is the smallest number since they began keeping track in 1980. That has to be good for continued global markets’ growth.

So, thank you Santa. We are regularly asked about our guesstimates for next year’s market returns, and we’ll say this: Our technical charts show current strong trends in major indexes in the US and abroad. We feel the S&P is still undervalued, as are international and emerging market stocks. Stocks may not climb as much next year as they have this year, and of course a correction is always a possibility, but we believe investors would be wise to remain overweight stocks (taking into consideration each person’s individual goals and tolerances, of course). We also believe that freer markets are likely to handsomely reward investors next year, as they have, in 2017.

So, on Dasher, Dancer, and the rest. Merry Christmas to All, and to all a Prosperous New Year.

Market Minute 12/21/2017 –  Holiday Checklist

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk

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