INSIGHTS

On October 30, 2017

AAM Viewpoints – The Trend(s) Are Our Friends

The current bull market run has been one for the record books. The S&P 500 has a total return of over 350% over the last 102 months (3/9/2009 – 10/25/2017), but even at this point in the cycle we believe the market can continue its historic run. A big reason for our optimism is an improving economic backdrop. Many recent reports have been followed with something similar to “…highest (or lowest) level in years.” Below is a list of 10 economic indicators and the corresponding data since the beginning of 2016. What becomes clear is the U.S. economy is heading in the right direction and can provide the foundation for the later stages of the bull market cycle.

U.S. GDP (% Change, Year over Year)

Source: AAM | FactSet data

S&P 500 EPS (% Change, Quarter over Quarter)

Source: AAM | FactSet data

S&P 500 Sales (% Change, Quarter over Quarter)

Source: AAM | Bloomberg data

Unemployment Rate (%) – 16-year low

Source: AAM | Bloomberg data

Initial Jobless Claims – 44-year low

Source: AAM | Bloomberg data

ISM Manufacturing Index – 13-year high

Source: AAM | Bloomberg data

ISM Non-Manufacturing Index (Services) – 12-year high

Source: AAM | Bloomberg data

Empire Manufacturing Survey (General Business Conditions) – 3-year high

Source: AAM | Bloomberg data

Consumer Confidence (Univ. of Michigan Consumer Sentiment) – 13-year high

Source: AAM | Bloomberg data

Case Shiller Composite Home Price Index – 10 year high

Source: AAM | Bloomberg data

These were just 10 examples, many of which are hitting multi-year highs (lows). When we add it all up, we believe that the economic trends are our friends and can provide the basis for higher levels. We believe any pullback in the equity markets should be viewed in the context of an ongoing cyclical bull market.

CRN: 2017-1002-6175R