OPEC's Nov. 30 meeting yielded an accord to cut oil production by 1.2 million barrels per day, sending the price of West Texas Intermediate 9 percent higher on Wednesday and 3.5 percent higher on Thursday. After this exuberance subsides, the market's focus will shift to whether OPEC members honor their agreement and a potential recovery in US oil production.
Gold prices initially surged on the news of Trump's triumph, but the yellow metal sold off in subsequent trading sessions to about $1,200 per ounce. An uptick in economic growth and inflation from fiscal expansion would take pressure off the Federal Reserve to be the sole engine of economic growth, which could result in two potential outcomes for gold.
The Federal Reserve has contended with deflationary pressures and a slower rate of potential economic growth, challenges that have made it difficult to hike interest rates. Higher inflation and stronger GDP growth should enable the US central bank to hike interest rates without damaging the economy or triggering a selloff in the stock market. The prospect of accelerating economic growth, higher interest rates and reduce regulation should give financial stocks a boost.
OPEC's upcoming meeting to decide the next round of oil production faces a number of obstacles, making a variety of outcomes possible. Here are the most likely ones, as well as the reasons oil will likely head to the $30s per barrel.
Geopolitical developments will increasingly shape the global economy and how investors allocate capital. We look at two companies primed to benefit from increased defense spending in key parts of the world.
A return to a more traditional US economic cycle would be good news for stocks as stronger growth and inflation drive pricing power, revenue growth and higher valuations. But watch these three signals to see if the economy backtracks.
President-elect Donald Trump’s plans for a massive fiscal stimulus via tax cuts and infrastructure spending should extend and perhaps accelerate a lackluster economic recovery that had started to peter out. With the economic outlook improving and inflationary pressure on the rise, this stimulus could give the Federal Reserve the leeway to hike interest rates at a faster pace than previously expected.
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