Global economic growth is accelerating and the outlook for business performance is improving. Two developments mean that Stephen Bell of BMO Global Asset Management expects stock markets to continue to perform well and head into the Christmas rally. This was stated by the economist in his weekly commentary “Fuel for the gathering of Santa Claus.”
The economic recovery continues around the world, despite supply problems and rising energy costs. The United States is leading the way. The Atlanta Federal Reserve’s Nowcast GDP, an indicator that includes all economic activity, rose sharply. Stronger economic growth also means better business results.”
Product supply problems began to recede. Exports from Korea and China are rising again. Traffic congestion for freight trucks waiting on the US West Coast appears to be gradually decreasing in the coming weeks, which means they can offload their cargo at ports. After the Christmas rush, this will give companies the opportunity to finally rebuild their stocks – stocks that are currently at dangerously low levels. .
Consumers also have cash reserves due to Covid and investments are increasing. Interest rates will rise in the US and UK, but slowly. On top of that, stocks usually don’t care about rising interest rates as long as the economy is growing.”
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