Weekly Economic Report
The news this week confirms that the front cars of the global economic roller coaster are rising up the lower part of the incline, the middle cars are passing the bottom and the last cars are still descending. We are very early in an expansion which should carry all cars upward over the next 18 months – barring new policy shocks! Our crystal ball only works looking out two years, so we are fuzzy on how things develop as we near the Presidential elections in 2020. We do not see new stimulus coming in the US before then, so the economy will be on its own. In our view, that leaves the US growing at trend near 2%, with little inflationary pressure – so no reason for the Federal Reserve to act. Meanwhile, recovery in Asia – led by China – and later in the year in Europe (which will eventually recover despite itself because of Asian demand) are likely to lift profits in local currencies, and maybe in dollars -- but contribute to foreign earnings in the S&P by the end of 2019 nevertheless.