Happy New Year!
This is the first full week of trading for the year – so back to work!
Markets are trying to shake off the December 2018 hangover. Last week’s first trading week sure made it interesting. The big news was the blowout jobs report last Friday coupled with the more dovish tones from the Fed. This cocktail was the recipe for a huge rally on Friday.
Has this changed anything?
Only the short-term outlook. It seems everyone had written off the economy for dead in December. With the Fed tightening, it was only a matter of time before the recession word came into play. Then, the jobs numbers came out.
Realistically, the problems are unchanged from last year. The difference is outlook on the Fed. If the money supply isn’t going to be choked off even more aggressively (because, remember, they’re still reducing their balance sheet and no longer buying bonds), perhaps the economy can continue to grow.
Additionally, the American public is about to get a very real look at whether or not they will experience personal tax savings under this new plan. It’s been a popular target because of growing deficits at the Federal level, but folks are about to get a direct taste of ‘’what’s in it for me.”
Some good news on China talks, the Federal government starts operating again (this is less of a concern to the market than the media would have you believe), and some decent earnings numbers and guidance in Q1 and this market could be back on track in short order.
If the Fed shifts to a more hawkish stance, trade talks with China drag on with no change, or we start to see numbers indicating an actual economic slowdown, then this market could head south all over again.
For now, we wait a couple weeks and see how the data shapes up.
If you want to be a stickler, the S&P500 actually hit a 20% drop from peak-to-trough during December. So, one could argue we’ve had the shortest bear market we’ve ever seen. Strangely, no one seems to be saying that. The talking heads keep talking about when the bull will die… so apparently an intra-day swing, or a one-day blip, isn’t how they want to measure things.
We will be sending out a more robust recap of 2018 and outlook for 2019 in the days ahead.
Here's to a great 2019!
This day in history:
On this day in 1789, America’s first presidential election is held. Voters cast ballots to choose state electors; only white men who owned property were allowed to vote. As expected, George Washington won the election and was sworn into office on April 30, 1789. As it did in 1789, the United States still uses the Electoral College system, established by the U.S. Constitution, which today gives all American citizens over the age of 18 the right to vote for electors, who in turn vote for the president. The president and vice president are the only elected federal officials chosen by the Electoral College instead of by direct popular vote.
Quote of the week:
It’s good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy.
PUBLISHED BY NICK TOADVINE