GLOBAL ECONOMY OUTLOOK IS GOOD, ALSO GOOD FOR STOCKS

There is worry that the stock market is getting toppy and could have a sizable correction.  One thing bolstering the stock market is that the global economy is on the rise and, of course, many U.S. companies are multinational and should be able to take advantage of this rise.*  Thus, in contrast, there are also those who say that this bull market may have more to run.**  One thing that sort of reassures me is that in setting new all-time highs in this century, the S&P 500 has changed to creeping higher rather than boldly moving higher as happened in the 1980s and 1990s.  See the figure from the reference:*

(Click on figure to enlarge)

My guess is that the current trend will continue.  I wrote earlier in this year that I thought the stock market would creep higher and that is what it is doing so long as the president leaves the economy alone.  The president temporarily talked down aircraft manufacturers, but they have recovered in spades.  Investors are always skittish.  I think Boeing is one of the best performing stock this year.

The health care stocks were hit on Friday the 13th by the president changing the rules on the ACA.  In toto, however, health care stocks have recovered nicely from a bad 2016.  I'm not sure he can do this because the subsidies he is removing are in the law.  Whether the current decrease in the value of healthcare stocks is temporary, remains to be seen.  They started to drop before Friday the 13th that may have been in anticipation of the president's actions.

The IMF upgraded its global economic growth forecast for this year by a tenth of a percentage point to a 3.6 percent annual growth rate, compared with its last report in July. For next year, the IMF expects the world economy to grow at a 3.7 percent annual growth rate. The improved outlook was driven by stronger numbers on global trade, investment and consumer confidence.*

The hurricanes are not expected to impact corporate earning much.

"Hurricanes Harvey, Irma and Maria have devastated many communities, inflicting severe hardship," the post-meeting statement said. "Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term."

New York Fed President William Dudley recently suggested that the ultimate impact of the storms actually could be a modest boost to the economy due to rebuilding activity. The "broken windows" economic theory has its detractors, but Dudley is not alone in suggesting that storm rebuilding results in some growth.***

* https://www.cnbc.com/2017/10/13/want-to-know-where-stocks-are-headed-keep-an-eye-on-the-global-economy.html
** http://www.barrons.com/articles/who-says-this-stock-market-is-overpriced-1507956689
*** https://www.cnbc.com/2017/09/20/fed-says-hurricanes-will-have-no-lasting-economic-impact.html