- Markets Limp to Small Gains in Third Quarter
- Keep Your Seat Belts Fastened
- Falling Energy Costs Helping Consumers and Industry
- End to Fed Asset Purchases: a Major Milestone
- Dividend Stocks in a Rising Interest Rate Environment
The third quarter was marked by a continuing divergence of U.S. economic and equity strength and that of other developed nations, with many emerging market economies also encountering headwinds. The U.S. economy finds itself as the locomotive of global economic growth once more, but it has a heavy load to carry. The Eurozone economy is weakening, China’s growth is slowing, and the effect of stimulative measures in Japan that could produce a genuine expansion remains to be seen. Falling commodity prices are taking a toll on some nations while helping others. In short, the global economy, which is more interconnected than any other time in history, is in flux.
Despite this flux and a streak of troubling news on the geopolitical front (and corresponding volatility) we remain positive on the U.S. economy and domestic stocks. The Fed, which this month ends its asset purchasing program, has stimulated the economy without igniting inflation. While the central bank is now transitioning to a new phase, it has signaled repeatedly that it will not change policy – or rates – abruptly. The trend in job growth is positive. Companies and consumers have rebuilt their balance sheets and are in a position to spend. Margins are holding up. There is a lot to like here at home, including a fundamental change in the U.S. energy picture, the far-reaching ramifications of which we discuss in this issue.
Successful investing requires learning from the past and thinking critically about the future. With interest rates likely to climb somewhat next year, our research team examined what happened to dividend growth stocks during prior periods of rising rates. The team’s conclusions may surprise you. Looking ahead, what we can be certain of is that the investment environment will evolve and that a disciplined, fundamentally grounded strategy remains the best course. You may continue to rely on us for that.
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