January 8, 2018 Market Outlook

World Markets’ Best Start in the New Year

After Wall Street posted its best start to a year in more than a decade last week, world stock markets hovered close to all-time highs on Monday which is the best start to a year in eight years. The combination of strong global growth and low inflation are somehow powering the appetite for risk.

European stocks opened higher, approximating their highest levels since August 2015. The Asian markets are performing well too as they inched towards all-time highs. The synchronized global recovery has incited central banks across the world to follow the Federal Reserve’s lead and start moving towards tighter monetary policy.

New Tax Cuts Seen as a Short-Term Economic Boost

It is the view of U.S. Federal Reserve policymakers that the tax overhaul of U.S. President Donald Trump is a short-term economic boost. The enacted tax law will neither permanently supercharge the economy nor cause an immediate disruption that would require a central bank response.

The said policymakers interviewed by Reuters shared a common view that the law would provide some short-term benefit without raising any near-term risks. They foresee the combination of corporate and household tax cuts will increase growth by up to half a percentage point annually for the next couple of years. It can help maintain unemployment rate at near record lows and lead to increased wages.

Fund Managers to Increase Position in Value Stocks

Going into the second week of trading, some U.S. growth fund managers are moving out of high-flying technology stocks and shifting their sights on stocks value stocks. These stocks are those they believe as having a more upside potential in a market that gained nearly 20% last year.

The tag refers to stocks with lower price-to-earnings valuations and therefore reasonably priced. The fund managers expect some risk to the technology sector after the big rallies and sectors that have attractive valuations and higher visibility into their revenue streams are better investment choices at this time.

 

Nvidia Forming Triumvirate with Uber & Volkswagen

U.S. chipmaker Nvidia Corp. is charting new territory as it gains entry into self-driving technology. Nvidia will be partnering with hail-riding firm Uber Technologies Inc. and car maker Volkswagen AG and use their artificial intelligence platforms to make further gains in the autonomous vehicle industry.

Ford Aims to Edge Rivals with Diesel Version of F-150’s

Ford Motor Co. (F) is looking to gain a marketing edge over its main rivals by introducing more efficient pickups this spring. Ford will offer a diesel engine version of its best-selling F-150 pickup truck.

The company’s executives are confident the F-150 diesel model will be welcomed by customers because of fuel efficiency. It features a 10-speed transmission that is capable of achieving 30 miles per gallon highway fuel efficiency. That is a level comparable to some midsize cars. The price tag will be between $2,400 and $4,000, depending on the specific model.

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