The Prudent Retiree: Market Outlook Summary Edition
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Horseman Group recently held their Spring Market Outlooks. We wanted to summarize the questions that were asked and our thoughts on the market going forward.
Our outlook for the overall market remains favorable. Our risk management model is positive and fundamental economic factors are market friendly.
There was a question about the 4th quarter 2018 decline and we answered that it seemed to be just a short-term correction that was for the most part over.
Another question was the potential impact of politics—the Presidential election and impeachment. History tells us that the market is politically neutral. It goes up and down under Republicans and Democrats alike. We pointed out that the market fell initially when President Clinton was impeached, but then rallied to new all-time highs after he was acquitted.
The economy is the primary driver of the market in the long term. Currently, the economic expansion as measured by GDP is strong. As of July 2019, this will be a record post war expansion. Corporate earnings and profits are up. Employment is near record levels and workers are earning higher wages.
Inflation remains below the Fed’s target rate of 2%. The most recent reading was 1.8%. This means there is no cause to raise interest rates. Chairman Powell and numerous Fed Governors have publicly stated there is no reason to raise rates. This is bullish for stock prices. Low rates can help to propel economic growth.
Questions were asked about trade with China and tariffs. We answered that a prolonged trade war with China would most likely be a negative for the market. Expect some tough rhetoric and bumps during the negotiations. We believe that an accord will be reached because the U.S. and China share an economic dependency.
In summary, the market outlook appears good.
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Horseman Group – 3 CityPlace Drive - Suite 290 – St. Louis, MO 63141 – 314.692.7842 – www.horsemangroup.com
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results
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