Jeff’s Stock Market Commentary: Continued US & Global Growth
Is The Trump Rally Over?
Summary: Although the US major stock markets are at or near all-time highs, the economic data signals continued US and global growth. My viewpoint is that we are still in the early stages of what could be a multi-year growth cycle.
If you listen to the talking heads on the business news channels it is likely that you will come away thinking that the market is overbought and on the verge of another crash reminiscent of 2000-2003 or 2008. As I talk with people (not my clients) I tend to hear the same thing—the markets are too high—then they talk about something like ‘valuation’. Granted, it is hard to argue that there is more upside potential ahead when the markets are already at all-time highs.
I distinctly remember making a similar argument in June and July of 2015 and back then the market drifted down throughout the summer and declined around 15% in August of that year.
So what makes it different now from back then?
The economic data. In June of 2015 the economy was already starting to show signs of slowing after a multi-year period of growth. As I’ve said in previous commentaries, my analysis of how to invest starts by looking at whether the economic tide is coming in or going out.
Jeff Voudrie’s Weekly Stock Market Commentary
The U.S. stock market may finally be entering a ‘normal’ correction. Yet, we are only down roughly 4% from the highs set in May. Year-to-date the S&P 500 and the Dow Jones Industrial Average are in negative territory (SP500 -0.36%; DIA -1.68%) while the NASDAQ and Russell 2000 indexes are positive 1-2%. It feels a lot worse than that solely because it has been so long since we’ve experienced even a 5% correction.
So is it time to panic?
No. I do not believe that we are entering a Bear market nor do I believe that we will see markets correct the “typical” 10-20%. It is important that investors adjust their allocation based on their risk tolerance and objectives because I do expect stock market volatility to remain for a while. Accordingly, I have been selectively reducing my client’s stock market exposure.
On the other hand, the uncertainty surrounding Greece has resulted in a rush to the safety of U.S. Treasury bonds and we’ve seen the positions in TLT and EDV recover 3-5% in the last few days. I have held on to these positions for the last 6 months because of the economic trends and indicators were signaling that the U.S. economy continues to slow. Employment has now been slowing for 4 months while inflation expectations continue to decline.
US Stock Market Trending Up
Canadian Stk Mkt Trending Up
US Bond Yields Yield’s Trending Down
Jeff’s Weekly Stock Market Commentary: Oil, Bonds and the USD
The last two weeks the markets have rallied to new all-time highs. At the same time we have seen the yield on 10-year US Treasury bonds increase from a low of 1.6% to 2.15% yesterday. That is a meaningful loss in the bond positions that have been working for the last 3-4 months.
What has caused the recent change in market direction and where do we go from here?
The impetus for bond yields suddenly reversing was the stronger-than-expected jobs report on February 6th when the economy added of 257,000 jobs. Around that same time, the USD started to decline relative to other major currencies. The declining USD corresponded with oil prices reversing and heading up.
Here is your weekly CSA (Common Sense Advisor) newsletter and week in review.
US Stock Market Trending Down
Canadian Stk Mkt Trending Up
US Bond Yields Yields Trending Down