Another month, another unfortunate tragedy this time claiming many lives at a school in Parkland FL. Since I started these monthly updates, there’s only been a few times I haven’t had to address a senseless tragedy. I truly hope this trend stops soon.
February started out on a rough note with volatility rearing it’s head for the first time in a few years. The S&P promptly fell 12% in one week which is a fast and furious move. This was one of the quickest markets drops I’ve seen since I’ve been in wealth management. We are still 5% off the highs as the market has recovered a little over half of the drop. As frightening as this drop was, we are well beyond it and all eyes now on tariffs, trade wars and Gary Cohn resigning just the other day. What’s hard to believe is the market’s reaction is relatively muted and isn’t down all that much considering the potential for protectionism which hasn’t ever been good. Trump recently proposed tariffs — a tax of 25 percent on imported steel and 10 percent on imported aluminum. Below is a breakdown of who’ll be hurt the most by industry by the proposed tariffs. Treasury Secretary Mnuchin proclamation that the tariffs won’t affect their projections for US GDP to reach 3% seems like wishful thinking.
My 2 Cents:
I felt last month’s drop was a buying opportunity and way to add slightly if you were on the sidelines for some time. Still, there’s incredible amounts of uncertainty in the world and valuations are not cheap. As always, risk management and sticking to your process is paramount. The Fed is going to be raising rates 3-4 times this year which will have an impact in the near future on borrowing costs. There’s been 11 rate tightening cycles since the Fed was created and 11 recessions followed. They weren’t the cause of recessions but they played a role along with many other factors. Goldman says stocks may dive 25% if the 10 year yield hits 4.5 and Jim Rogers says the next bear market will be the worst in his lifetime. All the more reason to stick to your process and follow prudent risk management protocols. Stay safe out there my friends.
Charts & Commentary
- Shale Output Hasn’t Grown This Fast Since Oil Was at $100 Unyielding U.S. shale production is expected to overwhelm global oil demand and weigh on prices this year, the International Energy Agency warned.
- U.S. Leading Economic Indicators Surge
- Inflation Starts to Make a Comeback
- Trucking Companies Orders Most Big Rigs In 12 Years, as they hustled to take advantage of one of the hottest freight markets in recent memory.
I hope you enjoyed this months financial markets update. If you have any questions please contact us directly. If you’re interested in a topic that you’d like us to address, please email us so we can include them in future updates.
If you’re interested in starting a dialogue and learning how we can help, please click the link below to book a call or meeting with us.
CEO & Founder