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Ep. 85 - The Fed calls the shots
One-Minute Summary: January was a good month. Stocks up 8%, small company stocks up 11%, international and Emerging Markets up 6% to 9% and bonds trading in a narrow and bullish range.
More data confirmed that China trade talks weigh on people’s mind. The Chicago PMI index dropped from 65 to 56 in a month. We don't usually talk about this index much but it’s Chicago and Boeing is headquartered in Chicago and Boeing sells a lot of aircraft to China…2,000 in all and 1,000 in the last five years at $350m each. So when we look at the New Orders component of the Chicago PMI and see it at a two-year low, we know how sensitive things are to the trade, er, talks.
The Fed announcement (see below) did more to drive stocks than earnings. Earnings were generally good and are up 12.4% YOY. But the hard comp numbers are coming up as 2018 had all the tax cut benefits so analysts are looking at low and perhaps negative growth for Q1 2019. We're not concerned. The market has priced in the slowdown and it mostly comes from energy and tech stocks.
We're also seeing a bounce back from bombed-out stocks. There are 38 stocks up more than 20% this year but the same stocks were down 25% in 2018. This seems a good sign as the market leadership is broader and investors are not just bidding up tech names. The best sector this year has been Energy, which peaked in 2015 and fell 38% to its December low. It’s up 13% since then.
We're in an easy money phase right now. That won't last too long because the data is going to start improving. The market overdid it on the downside in 2018. It may be overdoing it on the bounce back in 2019.
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Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com
Subscribe to our email newsletter: www.bandjadvisors.com/subscribe
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By Brouwer & Janachowski
4.8
66 ratings
One-Minute Summary: January was a good month. Stocks up 8%, small company stocks up 11%, international and Emerging Markets up 6% to 9% and bonds trading in a narrow and bullish range.
More data confirmed that China trade talks weigh on people’s mind. The Chicago PMI index dropped from 65 to 56 in a month. We don't usually talk about this index much but it’s Chicago and Boeing is headquartered in Chicago and Boeing sells a lot of aircraft to China…2,000 in all and 1,000 in the last five years at $350m each. So when we look at the New Orders component of the Chicago PMI and see it at a two-year low, we know how sensitive things are to the trade, er, talks.
The Fed announcement (see below) did more to drive stocks than earnings. Earnings were generally good and are up 12.4% YOY. But the hard comp numbers are coming up as 2018 had all the tax cut benefits so analysts are looking at low and perhaps negative growth for Q1 2019. We're not concerned. The market has priced in the slowdown and it mostly comes from energy and tech stocks.
We're also seeing a bounce back from bombed-out stocks. There are 38 stocks up more than 20% this year but the same stocks were down 25% in 2018. This seems a good sign as the market leadership is broader and investors are not just bidding up tech names. The best sector this year has been Energy, which peaked in 2015 and fell 38% to its December low. It’s up 13% since then.
We're in an easy money phase right now. That won't last too long because the data is going to start improving. The market overdid it on the downside in 2018. It may be overdoing it on the bounce back in 2019.
- - -
Learn more about Brouwer & Janachowski's wealth management services: www.bandjadvisors.com
Subscribe to our email newsletter: www.bandjadvisors.com/subscribe