May 2, 2017 — The United States’ economy passed a significant milestone in March, but some people are beginning to wonder how much longer it can continue at its current pace.
When the acronym “BRIC” was coined in 2001 to describe the economies of Brazil, Russia, India and China, many believed the new term was simply a marketing ploy. Today, “BRIC” has become so ubiquitous that economists typically use the term to refer to emerging markets as a whole. However, given the rising importance and increasing presence of certain growth characteristics in a number of other countries, the term “growth markets” may more fully represent the great diversity of emerging market economies.
Progress in the European debt crisis and better US economic data over the last three months have led to significantly less market volatility. As risks to the near-term outlook have abated, momentum in global equity markets has accelerated. Based on the long-term attribution of our returns, such an environment typically provides a compelling backdrop for us to harness the power of our quantitative models, because during such “normal” market environments, underlying asset class performance trends persist for longer.
The year 2011 was one filled with many ups and many downs – not just on the stock market. Everything from natural disasters to politically-created ones affected markets. In this three part series, we will look back at the last twelve months at some of the biggest factors influencing the economy and their potential impact going forward. In Part Two of this series, Balentine discusses the increasing importance of the emerging world over the past year and the issues we’ll continue to monitor as we enter 2012.
On September 1st, copper prices fell after export orders from China, the world’s largest copper consumer, declined for the first time in two years. Crude oil numbers, down 25% from April’s high, didn’t fare much better. Both copper and crude oil prices indicate the vitality of commodities markets and by extension, emerging markets, whose rapid economic expansion is closely correlated to commodities prices. Despite the continued strong performance of gold (another key commodity), many investors are left wondering if commodities and emerging markets can sustain their current growth levels or whether momentum is finally starting to slow.
The recent turbulance in Washington and on Wall Street have prompted many to ask if the sun is now setting on the United States. Optimists, like Warren Buffet, often argue that since 1776, it has always been a mistake to bet against the U.S. Yet history offers evidence that no nation is immune to a change of fortunes. In the 1500s, today’s “emerging world” actually generated well over half of global GDP.