Yin and yang. All things serving as inseparable and contradictory opposites. Preserving the greater balance of the universe and symmetry in all things. Male and female. Dark and light. Old and Young. Q4 2018 and Q1 2019.
The last six months have represented an extraordinary cycle. A really bad quarter (Q4 ) followed by a really good quarter (Q1). Three other similar cycles have occurred since the financial crisis ended in 2009. In each case, the following quarter was also positive and better than average.
Especially positive given that the S&P 500 sits a mere one percent below last year’s all-time high.
Earnings season truly kicked off last week. JP Morgan, PNC, and Wells Fargo reported Friday. Citi and Goldman reported Monday. With the pace picking up this week. A slew of positive reports from the likes of UnitedHealth Group, BlackRock and Bank of America, among others, has elevated stock prices. Continue reading
During 2016’s election, Senator Bernie Sanders fueled his candidacy by feeding a bill of goods to young people. Cynically capitalizing on their lack of knowledge and life experience. And hinting at utopian promises that the nation was in no position to deliver.
In so doing, Sanders secured roughly 84 percent of the thirty-and-under vote in key primaries like Iowa and New Hampshire.
Accordingly, it should not surprise to find that economic socialism seems to resonate with so many American Millennials. Disconcerting when you consider that even recently, being called a socialist in America was an insult.
Like a teenager’s allowance, Q1 came and went. What a quarter it was! Following Q4’s equity rout during which the S&P 500 lost 16 percent, Q1 calmed an angst-ridden global investment community. Turning in the best Q1 stock-market performance in a decade.
Equities were revivified by signs that inflationary pressures remained contained. Because lower inflation allows for higher PE multiples. And keeps the Fed at bay. Grounding two birds with one bullish stone. Allowing stocks to rebound from the losses suffered in the final months of 2018.
Moreover, despite downbeat Q1 earnings projections, investors have grown increasingly optimistic following the Fed’s cautious shift. After pulling money from U.S. stock mutual and exchange-traded funds at the start of the year, more than $25 billion flowed back in during the week ended March 13, the largest weekly inflow in a year.
Last week’s missive featured the first of two installments detailing this year’s potentially market-moving issues and events. Providing analysis of ongoing domestic economic and political issues that could move the market winds (here). This week, we broaden our perspective. Moving overseas to consider the regions, issues and events that may influence investment markets before 2021.
While no such list can be exhaustive, we believe this two-part series effectively covers those topics meriting scrutiny. Nor should our list be compared with those contrived within most consumer periodicals. As ours emanate from the investor’s perspective. Not that of the average buff, political junkie or animal lover. We will not spend time on this year’s ballyhooed superhero flicks, favored dog breeds, nor top names for girls.
Last year, TIME magazine chose members of the media, or as they put it, “Guardians of the War on Truth,” as the most influential person(s) of 2018. Even as recent polls and surveys by Gallup, Pew and the Columbia School of Journalism reveal that public trust in the media continues to decline. Which is rather like Wall Street nominating itself as the year’s most influential person in 2009. Right after it helped usher in the Credit Crisis.
The S&P 500 rose 0.62 percent over last week’s holiday-shortened trading week. Aside from biotech and energy, everything ended higher. Utilities, precious metals, small and mid-caps led the way. The S&P 500 has risen 11.4 percent for the year. Among its better starts in decades. Meanwhile, the DJIA notched its ninth-straight weekly gain. Returning 16 percent over that span.
Positively, the advance has been global.
The Shanghai composite index scored its seventh-straight weekly gain. Having climbed 12.4 percent. Japan’s Nikkei has posted six positive weeks over the last seven. 12 percent above its December low. And European stocks have been higher seven of the past eight weeks. Elevating 12.6 percent since December 27th.
Renown wild man and physicist Richard Feynman said, “Nature uses only the longest threads to weave her patterns, so that each small piece of her fabric reveals the organization of the entire tapestry.”
Traditionally woven by hand on a loom, a tapestry comprises innumerable threads that, though individually hidden in the completed work, aggregate to establish whatever pattern or theme the artisan had in mind.
On its own, each thread remains indiscernible. Insignificant. Together, however, these threads convey a bigger picture. Capturing the imagination through its color, complexity, character and creativity. Adding up to a visual narrative that cannot be ignored.
The Dow Jones Industrial Average trimmed earlier losses Friday afternoon. Propelling the index to its seventh consecutive weekly gain. A sign of the stock market’s resilience. Even in the face of heightened uncertainty.
The index surged in the final 10 minutes of the session to secure a 0.2 percent gain for the week — its longest winning streak since November 2017 when the market rose for eight straight weeks.
Stocks came under pressure earlier in the day amid growing unease about shaky eurozone economic data, renewed trade uncertainty and concerns about weakening corporate earnings.
For Q1, companies in the S&P 500 are expected to post their first year-over-year profit decline in nearly three years.
In ancient China, a respected military strategist wrote a book in which he infused his lifetime of expertise. General Sun Tzu’s Art of War became a manual on aligning aspirations with capabilities. The strategist set forth principles, selected for their validity across space and time, and then connected them to practices, bound by time and space. The Art of War, therefore, became a compilation of precepts, procedures — and categorical claims.
General Sun’s treatise was written sometime between 771 and 476 BC. Giving the Chinese roughly 2600 years to perfect his art of strategic dominance. Of course, the Chinese always played the long game. Believing that, given their history, size and geographic positioning, they would always have a chance to be at or near the center of the earthly universe, if only they played their cards correctly.
“The nature of water is that it avoids heights and hastens to the lowlands…
If you attack your enemy where he least expects it — if you avoid his strength
and strike his emptiness — then, like water, none can oppose you.” Continue reading