31 August 2014
The Standard and Poor's 500 Index hit all time highs over the week closing above 2,000 – the 32nd record close in 2014 and the four straight weeks of gains the best run since November of 2013 resulting in a solid return for August with the S&P up 3.8%. While the world has not repaired itself yet, and with data in the US remaining mixed, the weight of money from stimulus packages has helped strengthen the US economy and enabled companies to repair their balance sheets and return to profitability. Expectations are that US GDP growth will expand to nearly 3.5% in 2015 as a result. A number of companies appear to be in a good financial position and are able to borrow at low rates. As a result of this there have been plenty of buy-backs and increased dividends helping to drive stock returns. This advance in stocks has been in the face of greatly increased geo-political risks with tensions in Ukraine rising rapidly in recent days, weeks and months and issues in other regions. With news that a number of EU countries are slipping back into recession or remaining stagnant speculation grows that the ECB will add stimulus shortly.