“Winter is coming” is the House Stark motto in the HBO series Game of Thrones, which can be interpreted as one needs to stay vigilant for what lies ahead. Similar to the Starks, equity markets are always assessing and reassessing what the future holds.
In baseball parlance, the seventh inning stretch is a tradition in which fans stand up in the middle of the seventh inning and stretch after sitting through 6½ innings of a game. Some teams, such as the Chicago Cubs, have made it an experience as fans sing along with Bill Murray to “Take Me Out to the Ballgame.”
As we celebrate Independence Day, patriotism soars in America. U.S. flags fly high and patriotic music is played in bars and restaurants. Bruce Springsteen’s “Born in the USA” is a popular song this time of year, with its upbeat melody and its well-known chorus.
Not so long ago, in our own galaxy, synchronized global economic growth was an invisible “force” that rendered volatility practically non-existent. J.P. Morgan observed that there were zero days in 2017 when equity markets experienced a daily move of 2% or greater when, “since 1980, U.S. equities have averaged 15 such occurrences a year.”
It is beginning to sound like a broken record, but the stronger-than-expected economic growth has boosted investor confidence and produced excellent returns for equities around the world. Looking forward, we expect U.S. growth to stabilize and the global economy to grow stronger. Driving the global economic expansion is central bank easy monetary policies, low interest rates, low inflation and the rise in emerging economies’ commodity prices.