In contrast, the U.S. economy is now holding up relatively well, despite the challenges in China and some other emerging markets. True, nobody would confuse the current economy with the glory years of the late 1990s. But leading indicators are up more than 4 percent year-over-year, new orders are comfortably in expansion territory and job creation remains robust, as Bloomberg data show.
Although it’s still entirely possible to have a bear market despite a decent economy, I don’t believe the current correction marks the end of the bull market, especially considering solid growth and a lower likelihood for a September Federal Reserve (Fed) hike in interest rates.
Indeed, to the extent the U.S. avoids slipping into a China-induced recession, market fundamentals remain sound. In fact, indiscriminate selling has opened up pockets of value, including in European equities, high yield bonds and mega-cap stocks.
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog.