Back to BusinessBy Fisher Investments Editorial Staff, 11/16/2009
Though the US economy grew in the third quarter, doubts remain. But huge as the US is, the other three quarters of the world matters more.
Key European economies posted growth in the second quarter, and that growth extended in the third quarter as the Eurozone posted its first gain.
The Asian and Pacific regions continue to lead, China in particular.
No single country, even a country as big as the US, can prevent healthy global portfolio gains for the foreseeable future.
The US economy posted unexpectedly rapid growth in the third quarter, but doubt about the recovery's sustainability remains. Luckily, investors don't have to believe in US strength to believe in global stocks. "Going rogue" may be politically en vogue, but huge as it is, the US economy's no mad elephant—the other three quarters of the world economy keep us in tow. And the rest of the globe is moving ahead nicely.
Economic growth in key European countries turned up in the second quarter—three months before the US. That trend continued into the third quarter as even more countries posted positive GDP growth. And though falling slightly short of analyst expectations, the Eurozone grew as a whole for the first time since the recession took hold—a positive development that seemed impossible just eight months ago.
Global investors need not rely solely on a European recovery either. There's good news from the Asian and Pacific regions too. Australia and China posted employment gains in October. And though China's labor numbers may be a bit hard to verify, other factors reinforce their message. Chinese GDP grew 8.9% in the third quarter, the fastest this year, and year-over-year industrial production and retail sales each jumped over 16% in October. Not to mention JP Morgan predicting upcoming annual Chinese coal imports could double on infrastructure projects. In fact, expect domestic Chinese infrastructure projects to boost Materials stocks generally.
We can add a pinch of free trade to the mix too. Perennial enemies, Taiwan and China, are negotiating a free trade pact for 2010. No agreement's guaranteed, but that they're sitting down at all seems to signify the erstwhile icy economic relationship is thawing a bit. Emerging markets like China should continue leading the recovery. Indian industrial production rose 9.1% year-over-year in September. And Indonesian third quarter GDP advanced 4.2% over Q3 2008.
It appears the world at large is getting back to business. And no single country mired in an eddy (even a country as big as the US) is likely to prevent healthy global portfolio gains for the foreseeable future.
*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.