The Berkshire Business Confidence Index (BCI), sponsored and analyzed by Berkshire Money Management, indicates that there is a high level of optimism among Berkshire County businesses, as well as non-profit organizations that are responsible for business decisions. We mailed out 4,000 surveys countywide, and received responses from the full spectrum of Berkshire industries—non-profits, retail, manufacturing, finance, lodging, real estate, construction, and more. Each brings their own voice to this survey.
The technology-heavy NASDAQ stock market index closed out last week with a perfect 10 weeks in a row of gains. The last time that happened was 1999, during the peak of the Technology Bubble. Since the index’s 1971 inception, this was only the ninth such streak. That’s a long winning stretch for the market to run without interruption and you might think it is due for a breather. However, of the eight prior streaks, six of them went to 11 or more weeks. I know—one more week is hardly something to write home about, as my mom is fond of saying.
Want your boss to give you a raise? Or are you the boss and want a raise yourself? Simple—identify a problem to be able to solve it.
Death to the resistance! That’s what happened to the S&P 500 stock index last week. We have been tracking the rally from the Dec. 24 low to determine its sustainability. Due to improving breadth, we had all but ruled out a re-test of those lows. But we still needed to see the S&P 500 break its 200-day moving average of 2,740 points for us to consider the rally to be on firmer footing. We had been bumping our heads on that resistance line, but with such a positive technical backdrop that we speculated any failure would limit a decline to about a 4-percent drop in prices before breaking resistance. Still the possibility existed of a larger decline, but now those probabilities have dissipated.
Two weeks ago, in the Capital Ideas article “A lower high and icicles,” I wrote that “…we’re still in a cyclical bear market until proven otherwise. If we can break the S&P 500 above the 2,740 level, its 40-week moving average, I’ll feel more comfortable [that the stock market’s rally is sustainable].”
Employment is strong; we can all agree on that—or can we? I suppose it depends on whom you ask. If you ask the average person, they’re going to say yes. If you ask someone in the mortgage industry, they might have to force a fake smile.
What You Need to Know in Sixty Seconds
1. A recession is coming, but it won’t start any sooner than 2020.
2. US GDP should increase solidly over 2% in 2019 as we continue to benefit from fiscal stimulus.
3. The weakness of the equity markets in Q4 2018 will continue into 1H of 2019.
4. The S&P 500 will return double-digits in 2019, challenging the highs of 2018.
5. The 10-year Treasury will move above 2018 highs, to about 3.3%.
6. The Fed will hike the federal funds rate twice in 2019.
7. Inflation, as measure be the CPI, will rise from its current 12-month change of 2.2% by about a half-percentage point.
The big story this week is….oh, wait, there are two big stories this week. One is a two-day meeting of the Federal Reserve. The scheduling of the meeting itself is nothing new and not typically, by itself, a big deal. But this one is because the right words could start a rally in stocks. Or, just as easily, could justify the slump.