The Globe and Mail reports in its Saturday, Dec. 22, edition that the case for pessimism can seem overwhelming as United States stocks endured their worst week since 2011, and sank to 17-month lows. The Globe's Ian McGugan writes that Canadian stocks declined to mid-2016 levels. Mr. McGugan says if you look away from the dire headlines about plunging stock prices, you will see several indicators suggest the year ahead may not be quite as bad as many fear. After a miserable quarter for equities worldwide, Mr. McGugan says many stocks look reasonably priced. There is, to be sure, the spectre of rising interest rates. They tend to hurt stock prices because they raise the cost of borrowing and diminish the present value of future pay outs. But this trend also has an upbeat aspect. Central bank policy-makers are hiking rates precisely because they feel confident in the strength of their underlying economies. This is not entirely a bad-news message. In both Canada and the United States, economic growth is slowing, but not disappearing. The Bank of Canada expects the Canadian economy to expand 2 per cent in 2019. Meanwhile, the Federal Reserve is counting on a 2.3-per-cent expansion in the United States.
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