Wkly Update thru Mar 8th 2019 Did we step in Quicksand?

Market Soundbites

• It was 10 years ago this past Tuesday the S&P 500 touched rock bottom during what would become known as the financial crisis or the Great Recession. The S&P 500 has more than quadrupled since then. But it’s what comes next that matters most for investors…The S&P 500 has gained 17.6% annualized including reinvested dividends since then, well above the 10.2% it averaged from 1950 through March 6, 2009.…since 1900 the S&P has averaged over 6.4% annualized returns after inflation so we can expect a slowdown in performance for years to come moving the S&P back into its longer term trading band…

• Global growth is now slowing a good deal led by China and Europe with both counties adding to their economic stimulus, which is normally done because of a slowing, not a growing economy. PMI data from both China and Europe suggest their economies are rapidly slowing and in Germany, the economic engine of Europe is close to a recession while Italy is already in one…And let’s not forget the Feds here in the US have all put stayed on the sidelines regarding future rate hikes for 2019…in fact we are now seeing a higher probability of (19.80%) a rate cut before the end of 2019 vs a rate hike.

• A successful trade deal with China could give the Global markets a boost but it will clearly depend upon the details of the negotiated deal as to where or how high price action will move. The key will be whether the US Trade Tariffs are lifted, or they remain in place. If lifted, we can see a larger boost in price action and if they remain in place we can expect a sell-off but not as severe as a no deal resolution.

• We did see the February Jobs data come in very low at only 20,000 jobs added but when you look deep into the numbers you will see this was not too bad as January was overstated to the upside and when averaged out over time the numbers were OK….also we saw wage growth of 3.4% Year over Year which is good while the unemployment rate fell from 4% to 3.8%.

Enjoy this week’s Weekly Round-Up:

hpb