Global stock markets kept charging higher last week. The S&P 500 soared 2.2% and is now up 7.5% for the year. Global stocks climbed as the MSCI ACWI rose 2.1%. The Bloomberg BarCap Aggregate Bond Index slid a negligible amount last week and is down 0.9% for the year. The U.S. Department of Commerce announced GDP rose 2.6% in the fourth quarter.
Carson Group Research
Global stock markets have soared so far this year, while bonds have declined. With a few days left in January, the stock market is closing in on returns we would expect over a full year, not just the first month. Our conversations with investors, supported by statistical research, suggest investors have switched to focus on upside potential over volatility. With volatility at such low levels, who can blame them?
The rapid rise in stocks has confounded many predictions. While we believe markets will get more volatile, the sharp increases are reminders of the challenges of predicting short-term market performance. Please make sure you and your portfolio are prepared to weather downturns while staying invested in line with your goals and risk tolerance.
Source: Carson Group, Morningstar Direct
Key points for the week
- Global stocks remain in rally mode.
- Avoid chasing performance or timing the market.
- Trade policy poses a risk.
What are we reading?
Below are some areas of the market we paid particularly close attention to this week. For further information, we encourage our readers to follow the links.
U.S. GDP growth unexpectedly slowed in the fourth quarter. The economy grew at a healthy 2.6%, but it failed to meet economists’ expectations of 3.0% growth. Rising imports was a drag on growth; however, data showed the economy is still strong.
We are concerned about the risk of protectionist policy measures on the market. The Trump administration’s decision to place tariffs on imported washing machines isn’t a major threat, but risks of a trade war are elevated from recent decades. The Trump administration’s focus on trade policy and willingness to engage in brinkmanship fuel our concerns.
Fun story of the week
Some employers, such as Walmart and Siemens, are making interviewees play video games before their interviews start. They may seem nonsensical (one game makes players tap a button to inflate as many balloons as possible without popping them before a party), but these “games” or tests compose personality profiles of the interviewees and are said to improve diversity in the workplace. The games are created by U.K.-based Arctic Shores, so if you are really trying to nail that next interview, just download the company’s app and practice.
This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
S&P 500 INDEX
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
MSCI ACWI INDEX
The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 23 emerging markets (EM) countries*. With 2,480 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index
The Bloomberg U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.