Over the past month, equity markets appear to have changed course from the battering they took at the beginning of 2016. We have seen oil prices stabilize, more clarity around Fed rate increases, and stronger corporate earnings. In this month’s update, we review trends in emerging markets, and a shift in the US employment landscape.
Investors have been drawn back into emerging markets with signs of lower costs, structural reform, and a rising middle class.
In Brazil, investors are viewing the economy as an attractive place to do business again, as the effects of corruption and low growth put pressure on wages.
India has been expanding by over 7% per year – a number that is encouraging in a world where economic growth is sparse. India has implemented new reforms which are supportive to growth while keeping the deficit in check. We’ve seen the market react favourably to this effort to spur growth.
A rise of consumerism in China should trump incremental deficiencies. This is seen in every facet of the economy, from ecommerce, box office numbers, and tourism. In addition, the car market has surpassed America to become the world’s biggest.
We’ve been seeing a shifting trend in the employment landscape with small business driving fuller employment. Since the end of the recession in 2009, the U.S economy has added 13.2 million private sector jobs and the unemployment rate has fallen from a high of 9.5% to 5.0%. Wage growth is also showing signs of acceleration.
Americans are starting to show interest in startups to fuel innovation and efficiencies, and are looking to small ventures rather than public companies. An example of this is Kickstarter, which was founded in 2009 but has experienced enough growth to rival searches for “stock market.”
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