Running the US Bull Market Marathon

This second longest US bull market in history is raising questions as its upward climb continues. Where do we go from here? See why pace is key in running this marathon.

04.14.2017 - Fiduciary Trust Canada

Running the US Bull Market Marathon

It’s been called the “most hated bull market” of modern times. Bearish sentiment has accompanied its upward path through a sluggishly slow economic recovery. And yet, it’s now the second longest, second strongest bull market in US equities history. Where do we go from here? For a rising dividends perspective and growth opportunities viewpoint, we welcome Donald Taylor and Grant Bowers to this RoundTable. Here’s what they have to say about this seemingly tireless market.

Q: What kind of shape is this bull market currently in?

Donald Taylor: For the past several years, there’s been a lot of talk about what mightgo wrong. While respecting bearish arguments, the fact is we’ve been experiencing a stable, although somewhat fragile, environment where the economy muddles along with gross domestic product (GDP) at about 2%. This very slow economic recovery has been a generally favourable environment for stocks, stretching out the market upturn. Right now, I don’t see pieces in place for that dynamic to change much in the near to intermediate term.

Grant Bowers: Just because a bull market is old, doesn’t mean it’s losing strength. We expect the upward trend in US equities to continue, supported by stable economic growth, strong corporate earnings and benign inflation and interest rates. I think markets have behaved rationally thus far in 2017, responding to good news. Consider that this year, the S&P 500 Index has reported the first two consecutive periods of double-digit earnings growth since the latter half of 2011.

For the first time in a long time, we’re also seeing positive global GDP growth. For instance, Euro area GDP outpaced the US economy over the last year and corporate profits in the region have been accelerating. We see that region as being in the middle stage of a multi-year growth cycle, which should have positive effects for the US economy and equity markets.