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Best January for markets in more than 30 years

by Fortem Financial February 4, 2019

Equities posted the best January results in thirty years; the abrupt reversal of fortune, while perhaps bittersweet, signaled renewed confidence in the economy.  For the week the S&P 500® Index rose 1.57%, followed by the Nasdaq (1.38%), Dow Jones Industrial Average (1.32%) and Russell 2000® Index (1.29%).  On Wednesday, the Federal Reserve left interest rates unchanged and removed longstanding commentary that further rate increases may be necessary.  The Fed also stated that its primary means of adjusting monetary policy will be changes to the Fed Funds rate; the revised guidance lessens the role of balance sheet adjustments.  Many banks incorporated assumptions for no interest rate increases in their 2019 financial projections.  Friday’s jobs report surprised the market with the addition of 304,000 jobs, analysts expected only 172,000.  The unemployment rate edged up 0.1% to 4.0% as the government shutdown added to the ranks of the unemployed.

President Trump cited ‘substantial progress’ in trade negotiations and commented that he will soon meet with Chinese President Xi Jinping in an attempt to reach a comprehensive trade deal; absent new direction from the President, though his Administration still views March 1st as a ‘hard’ deadline on tariffs.  The recovery of crude oil prices continues; OPEC nations achieved 75% of their targeted production cuts in January as they implement aggressive actions to rebalance inventories.  Production levels in the U.S. are also benefitting from more fiscal discipline as drilling programs emphasize profitability.  The U.S. announced additional sanctions on Venezuela this week which will likely lower the country’s production levels.  Earnings results are generally favorable; more than 45% of companies in the S&P 500® have reported earnings; 68.1% exceeded analyst expectations.  Some, but not all, companies report the impact of trade issues.  For example, Caterpillar reported weakness in China while Graco reported strong demand and growth from all international markets.  The recovery of Technology companies continued with positive earnings reports from Facebook and Symantec.  Some company-specific developments, though, have reduced revenues and profitability for the quarter. 

February has a reputation for choppy returns and the move off the December lows likely needs to be consolidated, but we’re more inclined to view the persistency of recent strength as a legitimate sign of momentum that has been largely absent for the better part of the last 12 months.  

The dramatic change in sentiment is forcing investors who fled the equity markets in December to decide when to reenter.  Small cap stocks, many of which outperformed in January, will report earnings in February.  Investors are rewarding those companies with strong results; and yet, company executives may well temper expectations and outlooks pending clarity on trade negotiations, Brexit, oil prices and other geopolitical events.  Many companies are poised for growth in 2019; these results, along with positive developments on trade and monetary policy, may provide continued market momentum.

Source:  Pacific Global Investment Management Company

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. 

 

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Facebook shares shoot up after strong Q4 earnings despite...

Facebook managed to beat Wall Street's estimates in its Q4 earnings amidst a constant beat down in the press. Facebook hit 2.32 billion monthly users, up 2.2 percent from 2.27 bill la...

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Employers add booming 304,000 jobs in January, marking 10

Employers added 304,000 jobs in January, the 100th straight month of gains. Economists expected 165,000. Governement shutdown was set to have modest impact

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Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. Forward looking statements are based on current expectations and assumptions, the economy, and future conditions. As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict. Actual results may differ materially from the anticipated outcomes. Carefully consider investment objectives, risk factors and charges and expenses before investing. Fortem Financial is a registered investment adviser with the SEC. Advisory services are offered through Fortem Financial.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

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