Weekly Market Commentary February 25, 2019

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

The S&P 500 added another 0.7% to its impressive gains since late December. Optimism about a trade agreement between the U.S. and China continued to support markets.

While trade negotiations between the U.S. and China remain the key focus, a number of other key events and data releases are likely to move markets this week. The U.S. will release its first look at fourth quarter gross domestic product (GDP). President Trump will meet with North Korea’s Kim Jong-un, and China will release key economic data, too.

Global stocks performed well last week. The MSCI ACWI gained 1.2%. Bonds posted slight gains as the Bloomberg BarCap Aggregate Bond Index rose 0.1%.

Key Points for the Week

  • U.S. stocks rose for the eighth week out of the last nine.
  • Investor optimism seems to be washing over the fear investors showed in December.
  • Important economic data and the risk of disappointment from trade talks pose short-term risks.

Market Analysis

Another positive week. U.S. stocks continue to move higher almost every week. The S&P 500 has only dropped once in the last nine weeks, and it declined 0.2% in the week it was down. The 0.7% increase this week was the third-worst weekly performance since the week prior to Christmas. When a week that rises 0.7% is below average, markets have performed exceptionally well.

The increase in prices reflects the calm in popular risk measures. The VIX, which measures the expected volatility based on options contracts, has dropped below 15. The measure, sometimes referred to as “the investor fear gauge,” is now close to the levels seen at the market highs.

Markets likely won’t continue at this pace much longer, although the recent performance shows the market’s penchant for providing surprises. There are several short-term factors threatening the advance. First, the market is getting close to estimates of fair value after looking cheap during the decline. The sharp recovery has pushed the S&P 500 to within 3.9% of its all-time high. Second, global economic data continue to disappoint, and additional signs of slowing growth would likely pressure markets. Because of the government shutdown, this week will provide the first report for U.S. fourth quarter GDP. Third, market expectations for the U.S.-China trade talks are elevated. Those talks could either hit a significant bump, or the progress may not satisfy elevated expectations.

We are watching these fundamental factors closely. However, our biggest concern is the complacency in the markets and that investors are becoming less cautious as the rally continues. While risk seems to have headed south after Christmas, we expect it to eventually come back.


Fun Story

Dogs call 911 five times

Two dogs in Lakevillle, Minnesota, were having a “ruff” day recently. The day was so bad, they called the police five times. After the police did a walk around and found no trouble inside or outside the house, they were about to call it quits when the dogs called another 16 times. After tracking down the owners, they realized the dogs had got a hold of the office phone, which was set on emergency-call-only mode.


Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

Weekly Market Commentary June 12, 2017

Geopolitics took center stage this week. The diplomatic crisis in Qatar, a terror attack in London, parliamentary elections in the United Kingdom, and former FBI director James Comey’s testimony all moved investment prices. Global markets weathered the barrage fairly well. The S&P 500 f …

Weekly Market Commentary June 5, 2017

Global stock markets continued to hit new highs. The S&P 500 eclipsed its previous high and rose 1.0% for the week. Global stocks also hit new highs as the MSCI All Country World Index rose 1.1%. Bonds posted healthy gains, rising 0.5% as reflected by the Bloomberg BarCap U.S. Aggregate …

Weekly Market Commentary May 30, 2017

Stocks set new 52-week highs this week. The S&P 500 and the global MSCI ACWI both reached new highs on Thursday, before declining slightly on Friday. For the week, the S&P 500 rose 1.4%, the MSCI ACWI climbed 1.1% and the Bloomberg BarCap U.S. Bond Aggregate remained unchanged. 

Weekly Market Commentary May 22, 2017

While the week started with fresh new highs for the S&P, stock markets tumbled mid-week on concerns political allegations may disrupt reform agendas in the U.S. and Brazil. On Wednesday the S&P 500 dropped approximately 1.5%. For the week, the S&P 500 slid 0.4%, the MSCI ACWI in …
1 2 3 65 66 67 68 69

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation

TweetsFollow Us