06.17.2019 – The Final Countdown: Two Weeks to Quarter End and July 1

By Chris Perras, CIO.

The S&P 500 rose 0.5% last week to stretch its year-to-date gain to 15.2%! However, we are flat since Jan 28, 2018. Over the last eighteen months, there have been no broad stock market gains.  Hopes are high that the Federal Reserve cuts short term rates this week to help rescue the economy from the Trump induced trade war. We feel that a Fed cut is most likely a July event.  Inflation expectations, based on real-time market data, have tanked to well below the 2% level the Fed desires.

As we’ve said all year, Goldilocks returns when long bond Treasury yields trough!  Why?  Because stock markets like slightly higher inflation and growth, at the same time.  They like steepening yield curves, not flattening ones.  The precursor of a late 2019 upturn and 2020 increase in inflation are already surfacing behind the scenes.  Corn prices are up 30% the last month on horrible Midwest flooding delaying planting and crop yields.  Moreover, lumber (along with “Dr. Copper,” one of two the bonus “Goldilocks” indicators) is also up 30% since Easter as lower mortgage rates are already stimulating housing demand.

In a special Stock Talk exclusive, we covered the first part of our second half 2019 outlook last Friday on the show! It’s now available to listen to anytime, and our forecast for the 2nd half is ONLY available via Stock Talk for the next few weeks.  The second part of our outlook will be released this Friday, also exclusively via our Stock Talk Podcast.  We might even provide our readers an early “Goldilocks + melt-up” scenario for the market for 2020 and early 2021 should our growth and stock market focused President Trump return to those goals and get re-elected in November of 2020.

Weekly market updates contain general information and express the views of Oak Harvest Investment Services. Data and information cited is believed to be reliable at the time of creation, but is not guaranteed. Content should not be regarded as personalized investment advice. 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. Past performance is not indicative of future results. Investing involves the risk of loss.