Acceleration by Global Economy Likely, Bull Market

Market Update, 2020-02-10. Equity markets rallied early last week to new all-time highs. Firstly, this excitement was on the back of good earnings and, secondly, stronger economic data. And the S&P 500 was led by Technology and a few healthcare names.  Markets pulled back on Friday on ongoing coronavirus outbreak concerns. Moving from peak to trough, the S&P 500 dropped almost exactly 3.25% in Q1. However, we still sit up about 2% year to date. And the world economy is poised for acceleration.

Federal Reserve: no acceleration likely

The early February pullback was within the range of a normal 3–4% pullback for a Q1 Y2 of a Federal Reserve easing cycle. And, later this week, Fed chairman Jerome Powell will testify on the semi-annual Monetary Policy Report to Congress. But we expect comments on persistent low inflation and the risks posed by the coronavirus to continue pushing the Fed in a more dovish direction.

Politics: acceleration inevitable

For our readers interested in political events, the New Hampshire Democratic Primary is tomorrow.

Recent polls are averaging the following for New Hampshire:

  • Sanders 26.6%
  • Buttigieg 21.3%
  • Warren 13.1%
  • Biden 12.9%
  • Klobuchar 9.6%.

And the final late tallies from Iowa last week were:

  • Pete Buttigieg 26.2%
  • Bernie Sanders, 26.1%
  • Elizabeth Warren 18%
  • Joe Biden 15.8%
  • Amy Klobuchar 12.3%.

Global economy outlook: accelerationacceleration

We currently expect the global economy to accelerate as we move through the year. This would result from the starting of inventory restocking and manufacturing lines.  Additionally, all of the trade deals recently concluded by the U.S. will ramp up as we move through the year. Specifically, these include the deals with China, Mexico, Canada and Japan. Currently, our overall outlook for stock markets for 2020 hasn’t change due to recent events.

Resources

  • Oak Harvest’s Stock Talk podcast, dated February 7, 2020 — Stocks and the Economy: Winning
  • Find more information and help on our YouTube Channel.
  • We invite readers to sign up for our next Investing 101 Class: “Taming the Emotional Investor,” with special guest speaker Weston Wellington from Dimensional Fund Advisors. It will be on February 21, 2020, at 10 A.M.  Register at www.oakharvestfg.com/retirement-class, or call or text “INVESTCLASS” to 281-822-1350.

 

Weekly market updates contain general information and expresses views of Oak Harvest Investment Services. Data, articles, and information cited are believed to be reliable at the time of creation, but is not guaranteed. Content should not be regarded as personalized investment advice. Also, views and opinions expressed may change without notice and do not constitute a recommendation, or an offer or solicitation to buy or sell securities. In addition, Oak Harvest makes no assurance as to the accuracy of any forecast made. Also, past performance is not indicative of future results. As always, investing involves the risk of loss.