A Cat and Mouse Fall

Key Points

  • U.S. stocks remain near all-time highs, but we expect some continued churn as fall is shaping up to bring a series of political, geopolitical and monetary policy conflicts which could contribute to greater volatility.
  • Ample global liquidity, healthy economic growth combined with a solid earnings outlook should ultimately allow the bull market to continue.
  • Global economic growth is looking good and is helping to fuel investor optimism over further gains in international stock markets.

The hits keep on coming

Americans are unbelievably strong and resilient but this is getting ridiculous. First Harvey and then Irma have left destruction in their wakes. The stock market impact has been relatively modest and in fact stocks rallied after Irma ended up being less destructive than feared—but the human impact is on a scale that is heartbreaking to us all. On the flip side, it has been heartening and a reminder to us all what a great country this is and how we come together when it matters to help those in need.

Historically, following major hurricanes, there has been a downtick in economic activity and a short-term surge in unemployment claims; while the subsequent quarter or two brought strength from recovery/rebuilding activity. There is a unique double whammy this year with back-to-back storms along with a tight labor market. This could limit the number of workers available to help in the recovery efforts (for more on the hurricane aftermath see Liz Ann's Trying to Reason with Hurricane Season: The Aftermath of "Harma")