Third quarter earnings are coming in slightly above expectations while revenue growth remains weak.
The Federal Reserve bond purchase program remains in place most likely until 2014.
Congress kicked the debt ceiling and budget negotiation cans down the road with a new deadline of Feb. 7, 2014 for an agreement.
Until this year investors had the luxury of a 30 year bond bull market to fall back on for low risk returns. With stock markets now significantly outperforming bond markets more money flows in to the asset which treats investors best.
US stocks at 15 times 2014 earnings estimates are not cheap but not expensive. They are very capable of going to higher multiples in a low interest rate environment with rising earnings.
There are few signs of a classic stock market top such as Fed tightening, excess leverage, or too much bullish sentiment.
We typically get to the point where stocks are the talk of the town and investors can do no wrong before a big setback.
Asian, European and Emerging market stocks are still feared and even loathed by some. Yet Japan +22%, Germany +19%, France +18%, UK +13% are big winners this year. Emerging markets are coming back from big losses and commodity based countries are hopeful for better times in 2014.
In this world of slow growth, companies with high quality products, record levels of cash, share buyback programs, and rising dividends are preferred to low coupon fixed income investments.
The global stock rally should continue barring monetary tightening or a regional conflict of significant magnitude.
Doug
November 4, 2013
Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.
