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Daily Blog

Tuesday, October 6, 2015

Good news came over the weekend that an agreement was reached on the Trans-Pacific Partnership (TPP) in a trade pact that covers 12 countries, 800 million people, and almost 40 percent of the global economy. Global trade is so important to global growth that we categorize it as one of our five “tectonic shifts” that ultimately drive markets. This certainly is progress but an “agreement” does not mean ratification – legal contract – by all of the countries, in particular the U.S. Congress. This free trade pact though would be the biggest for the U.S. since NAFTA and a good step to bolstering U.S. and global growth as trade has been languishing. In fact, the World Trade Organization cut its global growth forecast to 2.8 percent down from 3.3 percent in part due to prospects for global trade. The 12 member nations of the TPP include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the U.S benefiting both Emerging Markets and developed economies. Meanwhile, the latest trade data reported a 2 percent drop in exports (MoM) pushing the U.S. trade deficit to a five-month high of $48.3 billion. Imports rose 1.2 percent, but are down 2.2 percent from a year ago. This is despite a strong dollar making foreign goods cheaper for U.S. consumers and is reflective of that downward trend in global trade. Please see “Global Trade” on page 44 of the Voya Global Perspectives™ book.

Weekly Commentary & Statistics

Monday, October 5, 2015

The Dow and S&P 500 shook off bouts of volatility to post weekly gains, whereas the tech-heavy Nasdaq lost ground. Momentum vacillated ahead of the U.S. jobs report; when that report proved to be a let-down, stocks initially retreated but later rallied. European and Asian bourses were mixed for the week.

Monthly Commentary & Outlook

September 2015
  • There may be a lot of ugliness out there — China, oil prices, currencies — as free markets re-assert control, but such normalization reduces broader risks to the economy and markets.
  • The U.S. economy’s march toward normalization, led by the consumer, has been the bright spot around the world.
  • Without strong earnings growth and the artifice of fed stimulus, markets currently are behaving as normal markets do.
  • Investors should stick to the plan made in calmer times, as it is the best defense from irrational — and often self-defeating — actions.
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