If watching the market spiral further down is having you reach for the antacids, take refuge in the safety of stocks that only do business in the States. Trading for great values and unaffected by the strong dollar or overseas turmoil, these three all-American stocks make great portfolio additions.
To say that the global economic outlook is bad and deteriorating is like saying Cam Newton faced “some” pressure from the Denver defense in Super Bowl 50. It is a vast understatement. Markets have gotten off to a very rocky start here with the S&P 500 down over five percent in January which was its 10th biggest loss in an opening month of a year in its long history. The sell-off has continued in February through the first two weeks of the month. The main indices are now solidly in correction territory.
However, that performance looks pretty darn good compared to what is happening across the globe. Markets in Europe, Japan, and China are in official bear market territory. Emerging markets in South America like Brazil are in free fall. Banks in Europe are selling where they were in the financial crisis.
Two things caught my eye in the week that just past. The first were comments from Maersk, one of the biggest shipping companies in the world. Its CEO called the current activity in global trade worse than that during the height of financial crisis. JP Morgan then came out and stated they would not be surprised to see other central banks follow the Bank of Japan with their own negative interest rate policies. This speaks to how much of a problem a deflationary spiral could become if global economic activity continues to deteriorate and commodity and oil prices continue to collapse.
Domestically, things are holding up quite a bit better. The recent jobs Report came in weaker than expected but we still saw a net gain of over 150,000 new jobs in January. Auto sales are still robust and housing also is slowly improving. Both the Federal Reserve and the White House are projecting GDP growth of approximately two and a half percent in 2016. The Fed has been too optimistic on its initial economic assumptions throughout the weakest post-war recovery on record and the office of the president obviously has reasons to see the economy through rose colored glasses in an election year. However, GDP growth of 1.5% to 2% outside a major geopolitical event does seem like a reasonable bogey for 2016.
