The math is simple. As long as the Federal Reserve Bank is neutral to positive on lowering interest rates, investors who want any kind of return are forced into the stock market. Until that changes, equities are in the buy zone.
At the Market
The S&P 500 Index finished up 18% for the six months ending June 30th. That was the best first half since 1997. Historically, that kind of return is three times the gains investors can normally expect from the market in an average year. The chance of a repeat performance in the next six months is, at best, remote.
It wouldn’t be a normal weekend in the financial markets without something to worry about. This weekend, it is the meeting of the two presidents, Trump and Xi, in Japan with $350 billion in new tariffs hanging on the outcome. What are the odds that they clinch a deal?
It was a good week for investors. The S&P 500 Index hit an all-time high. The Fed indicated that they might cut interest rates sometime soon, and the President is once again optimistic about a China trade agreement. That’s a heady cocktail that could see markets gain another 3-5% over the next few weeks.
Investors can credit the Fed once again for the market’s revival thus far in June. The buying is fueled by expectations of three rate cuts by no later than December. Is that wishful thinking?
You would think that a non-farm payroll report that was way below expectations would give investors pause. After all, when the pace of employment slows, it usually means that the economy is slowing as well. So why did the stock market spike higher?
No question about it, the President’s decision to impose 5% tariffs on all Mexican imports by June 10 caught investors flat-footed. Combined with the on-going war of words with the Chinese on tariffs, markets worldwide fell sharply this week. Is a relief rally in the cards?
If it were not for computer-driven trading, it might actually be funny. Financial markets are careening up and down on a daily basis based on the next tweet or comment from the Trump Administration or its counterparts in China. We could see more of the same next week.
The old adage “sell in May and go away” seems to be working this year. In short order all three averages experienced a down draft over the past few days that amounted to about a 5% decline in total. Is there more to go on the downside?
Volatility in the form of U.S. trade tariffs levied on China cut through investors’ complacency with a vengeance this week. It took less than three days to drop the markets by 3%. Is it over or do we have another 5% or so to endure?
Some people believe we are in a “melt-up.” It is where the simple weight of money pouring into the U.S. stock market continues to carry stocks ever higher. Whether that qualifies as an investment thesis, or simply a lame excuse to justify record highs, it matters little to the bulls. It is true that this past week, we actually witnessed a rare event—a two-day, 50-point drop in the S&P 500 Index—before stocks recovered. But good news on Friday morning (job gains in the economy came in at 236,000) cheered investors. It was largely a goldilocks report where wage gains (considered…
The first print of the nation’s Gross Domestic Product for the first quarter of the year came in at 3.2%, versus 2.5% expected. That was a big beat and justifies the market’s gains over the last three months. If you couple this with the quarter’s earnings results, which have been stronger than expected, you have the ingredients for a goldilocks economy and strong stock market. “If the numbers were so good,” asked a client, “then why didn’t the markets react more positively to the news? Well, one reason may be that the data provided a past view of the economy…
The stock market won’t quit. It has been on a tear since the day after Christmas. It feels like it wants to keep climbing. That would be a fairly simple feat at this point, since we are only a percent or so away from regaining those historical highs. What will happen once we get there.?
After a week of low volume consolidation, all three averages broke higher on Friday. The bulls are still in charge and seem determined to push stocks back to their all-time highs. A trigger could be this year’s first quarter earnings season, which is upon us, some of the multi-center banks reported today. They did not disappoint, beating estimates handily and expectations are that most of the big banks will also beat earnings estimates. That won’t be too difficult to do given that earnings estimates have been down-graded not once, but twice, over the last three months. Overall, the Street is…
As fearful as investors were back in December, the greedier they have become in April. Investor sentiment is climbing, interest rates are falling, and the Fed is on hold. All we need to push the markets even higher is a trade deal with China. It’s coming.
Friday marked the end of the quarter for stocks and investors worldwide celebrated by buying. It was a spectacular come back from last year’s fourth quarter. The question on your mind right now is will the run continue?