FMA Market Update – January 2017 Edition
January 3, 2017 | John J. Klobusicky CIO, CFA®, CAIA
Fourth quarter S&P 500 profits are predicted to grow at about 4.2%, marking the first time the index has seen year-over year growth in earnings for two consecutive quarters since Q4 2014 and Q1 2015. Interest rates remain favorable and the economy continues to expand at a modest pace, providing an underpinning for what today are historically high market valuations. But according to a recent Bank of America Merrill Lynch survey, this is already baked into the cake, noting that investors are already expecting and pricing in above trend economic growth, higher inflation, and stronger corporate profits for 2017.