NEWS
What Happened This Week
Annual US inflation has fallen to 2.5%, as measured by last quarter’s headline Personal Consumption Expenditures (PCE) index.
From August to September, consumer confidence experienced a drop, due to fears of higher unemployment and reaccelerated inflation.
Overall investor sentiment (expectations of positive markets vs negative markets in the near term) shows positive outlook, as measured by the AAII Investor Sentiment Survey and Fear and Greed Index.
Average 30-year mortgage rates dropped to just over 6%, the lowest in two years.
“Over the last 75 years, the final three months of the year have resulted in negative returns only eight times when momentum was strong during the first three quarters,” observed Adam Turnquist, chief technical strategist for LPL Financial.
Stock markets have continued to rise despite the uncertainty surrounding US elections.
How I See It
It’s actually quite common to see stock markets experience a boost in the second half of a Presidential election year.
Why?
Because regardless of who wins, extreme negative emotions start to dissipate as the election gets closer and then passes into history. Voters start to realize that it’s not the end of the world, after all.
Investor sentiment appears to be optimistic, but not unreasonably optimistic. Optimism can continue for years before a bear market is encountered.
While volatility is normal, and there are no guarantees when it comes to markets, there is plenty to suggest that this two-year bull market still has room to run over the next twelve months.