In the month of November, the Dow Jones and S&P 500 Indexes hit all-time highs, and economic indicators were strong. For the month of November, the S&P 500 Index returned 3.07% and the FTSE All World Ex-US Index was flat. Year-to-date ending November 30th, the S&P 500 Index climbed 20.94% and the FTSE All World Ex-US Index increased 23.24%.
Real GDP increased at an annual rate of 3.3% in the third quarter of 2017 according to the second estimate released by the Bureau of Economic Analysis. In November, total nonfarm payroll employment increased by 228,000, and the unemployment rate was unchanged at 4.1%, according to the U.S. Bureau of Labor Statistics.
The headline ISM Manufacturing index declined to 58.2 in November, from 58.7 in October, and a 7-year high of 60.8 in September. The small decline of the index still leaves it at a high level consistent with good GDP growth. The depreciation in the dollar in 2017 and the strength of demand means the outlook for the manufacturing sector remains positive . The University of Michigan consumer confidence index declined to 96.8 in December, from 98.5, yet the index remains at a high level consistent with stronger real consumption growth.
President Trump’s proposed tax reform bill was passed by the Senate and the House, and though different versions of the bill still need to be worked out, we may see a version of the package in place by early 2018. We don’t know yet what will become law, but the package could provide a modest boost to economic growth and inflation in the short term. The senate also held hearings to confirm Jerome Powell as the new Fed Chair, which were uneventful. There are indications for another few rate hikes in 2018, and Powell is expected to have much of the same outlook as Janet Yellen.
In Europe, growth and GDP remain solid. In November, the IHS Markit Eurozone Purchasing Managers’ Index was the highest in 17 years. As mentioned in prior communications, we feel that countries outside the U.S. have attractive relative valuations and fundamentals that warrant a higher than normal weight in a portfolio.
We continue to believe that a long-term perspective and a diversified portfolio will benefit investors. If you are a client and would like further detail on these topics or anything else, please don’t hesitate to call or email us. If you are not a client, but would like more information on Callan Capital’s wealth management services, please contact us at (858) 551-3800 or visit www.callancapital.com.
Past performance does not guarantee future results, which may vary. This material is provided for informational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. For more information regarding Callan Capital, please refer to our most recent Form ADV Part 2A which may be found at www.adviserinfo.sec.gov.
S&P 500®: Standard & Poor’s (S&P) 500® Index. The S&P 500® Index is an unmanaged, capitalization – weighted index designed to measure the performance of the broad US economy through changes in the aggregate market value of 500 stocks representing all major industries.
The FTSE All-World ex US Index comprises Large and Midcap stocks providing coverage of Developed and Emerging Markets excluding the US. The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98% of the world’s investable market capitalization.