Global markets rallied last week due to several events. First, news that President Trump has approved a limited trade agreement with China. Second, U.K. voters sent Boris Johnson a clear message in the polls last week with a decisive victory for Johnson’s Conservative Party. Johnson said he will increase spending and plans for a January 31, 2020 exit from the EU. And third, news on the inflation front continues to show prices are rising modestly at the producer and consumer levels. Fed Chairman, Jerome Powell said the Fed will hold interest rates steady as the central bank believes rates are inline with a policy of stimulating the economy without stoking inflation.
The Wall Street Journal reported last week about the surge in the market in 2019 and how investors have responded. Surprisingly, with the absence of any substantive negative news, investors have pulled over $135 billion from the market. Yes, we know there is no shortage of concerns out there. However, job growth continues to post healthy gains, retail sales are strong and while the trade dispute with China has reverberated through global markets, domestic companies have been able to adjust to the higher prices or find alternative suppliers. Actually, the only real negative you could point a finger at is earnings growth. Those numbers are drifting slightly lower, but moderating earnings is not the end of the world. The only concern here would be if U.S. corporations start experiencing a double-digit earnings decline.
As markets enter the final two-weeks of the trading year, we will see if the indexes can hold on to their gains. January brings not only a new year, but also the beginning of fourth quarter earnings. Stay tuned.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Consult your financial professional before making any investment decision. You cannot invest directly in an index. Past performance does not guarantee future results.
This blog was prepared by David M. Kover, CFP® C(k)P®
Sources: Bloomberg, Dorsey Wright & Associates, Inc. and The Wall Street Journal, FactSet. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
Securities offered through Triad Advisors, member FINRA/SIPC. Investment advice offered through Resources Investment Advisors, LLC, an SEC-registered investment adviser. Resources Investment Advisors