Market Summary
We believe that although a full or partial retest of recent lows may occur, the correction’s worst is over, and if the past is a guide, U.S. stocks will appreciate over the next six-month time-frame, volatility will be with us as the market retests its bottom and then begins to rise. We think that the psychological fears that drove the correction are based on misinterpretations of the fundamental economic data. Commodity price declines are being driven by supply and a strong Dollar, not by collapsing demand. A Fed rate hike occurring in December may give the Dollar more strength, but its rate of appreciation is likely to slow over the coming year. China’s growth, although slowing, remains robust and supportive of the global economy. Within the U.S., we favor technology, internet-related, software, biotechnology, pharmaceuticals, medical equipment, home-builders, and financial services.
