Don:
I tend to agree with your idea that the market will generally not move too much in either direction next year (~6 months). Initially, and especially with all the gloomy news of the last couple of weeks, I was bracing for a strong bear market. Business Week's last issue, which is dedicated to forcasting the 1998 markets trends, helped me arive at this conclusion.
On one hand there are the Asian "Flu", the threat of diflation(overcapacity, and currency devaluations), wage pressures are finally beginning to surface, etc..
On the other hand, aggregate demand has not let up and certain sectors, like housing, and services are experiencing growing demands and cosumer confidence remains high...
While competitive pressures will definitely lower (record) corporate earnings, and operating margins, those should remain historically strong...
My understanding is that trade constitutes around 30% or US corporate earnings.. of which more than half is in exports to Europe and the other half is split between Aisa and Latin America. So provided that LA or Europe do not follow suite.. and domestic demand remains strong corporate earning should not stray too far off current levels.
Business Wek also seem to conclude that (suprisingly) "belief" in equity as a superior investment vehicle is stronger than ever (which should keep the influx of funds into the capital markets)
...Any opinions?
Cheers! |
