Markets have been in a good spot
The International Monetary Fund expects the US economy to grow 2.7% in 2018 and 2.5% in 2019. The global economy is expected to expand 3.9% in both 2018 and 2019. The simultaneous growth could have a huge positive impact on the stock markets around the world. In the United States, recent tax reform legislation could result in healthy corporate earnings growth. We’ll have to wait and see how the Federal Reserve’s current approach to interest rate hikes will play out.
Beware of complacency
Investors, however, shouldn’t be complacent like they were in 2006. They need to watch the headwinds that are currently causing turbulence in the markets (VOO) (IVV). Rising protectionism, monetary policy tightening, rising yields, impending interest rate hikes, concerns over North Korea and Iran, China’s desire to play a bigger role in world politics, and US domestic politics are just some of the key challenges to watch.
Historically, some volatility in the market (QQQ) is perfectly normal, and market turbulence tends to be sharper after a long period of tranquility.