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Afternoon Note

The World Takes the Lead?

By Charles Payne, CEO & Principal Analyst
7/24/2017 1:14 PM

I got the world on a strong

Sittin on a rainbow

Got that strong around my finger…

It’s not good news for the US economy, but it could be great news for large multinational US corporations. The International Monetary Fund released their ‘World Economic Outlook’ this morning, which can be summed up as America and advanced economies just plodding along, as the rest of the world begins to gallop.

WEO Macro	2016	2017	2018
Advanced Economies	1.7%	2.0%	1.9%
Emerging/Developing Economies	4.3%	4.6%	4.8%
Global	3.2%	3.5%	3.6%

Back in April, the IMF modelled for 2.3% GDP growth in the United States this year. Now, they’re down to 2.1%, but its offset with higher outlooks in key emerging economies like China and India.

WEO Micro	2016	2017	2018
United States	1.6%	2.1%	2.1%
China	6.7%	6.7%	6.4%
India	7.1%
United Kingdom	1.8%	1.9%	1.7%
Mexico	2.3%	1.9%	2.0%

I’m not a major fan of IMF data per se, but it dovetails with most outlooks that see the United States growing at a steady pace but nowhere near the 3% it’s capable of with the right policies in place. That said, growing an $18 trillion economy 2% is not enough to generate profits that bolster market valuations but its growth that moves stocks higher.

As the dollar continues to drift lower, and the rest of the world picks up the economic pace, it will be a net plus for the stock market but not for Main Street.

There are ways to help both sides of this equation.

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