07.08.2019 – July 4th – Expecting Fireworks? Nope, just a Normal Summer

By Chris Perras, CIO.

Stock markets rose during last week’s holiday shortened trading period with the S&P 500 gaining 1.7% while breaking out to a new all-time high with the SP500 near 2985. Almost all groups posted gains, with FANG stocks and consumer staples leading the pack.  Energy stocks lagged on a relative basis as they have for almost the entire ten-year bull market.  The investment team at Oak Harvest continues to underweight energy stocks for our clients. We hope our educational outreach as to why energy related stocks will likely continue to secularly underperform the markets for a few more years has helped our investors.

After consolidating in a huge range since early January 2018, the recent stock market action is now given way to calls for a “bullish breakout” with Barclays Banks once again declaring the chance of a near term “melt-up” of 10% upside possible.  Sorry folks, but while the team at Oak Harvest is bullish, as we have been all year, 10% upside in the near-term isn’t happening.   “Melt-up” calls are once again premature.

However, we do want to thank Federal Reserve Chairman, Jerome Powell for coming to his senses and pausing on monetary tightening policy.  Don’t fight the Fed!  While this is the first step in Goldilocks returning, we reiterate that it is not sufficient for the condition for “goldilocks for stocks”.  Later this week, Chairman Powel will be in front of Congress for his semi-annual testimony on Monetary Policy (Wednesday & Thursday).  The financial press will be “scouring” his testimony for clues on the precise FOMC path on interest rates.  We will get to hear theories and opinions on what will happen with the Federal Reserve.  The Oak Harvest investment team DOES NOT care about these opinions or theories on the Federal Reserves path.  Pausing is pausing.  Easing is easing.  Figuring out the EXACT path isn’t necessary.  What is necessary is? …..Patience, Patience, and more Patience.  Opportunity will present itself.

We reiterate, as we have for over a year, the cycle of 2018-2019 is playing out almost exactly like 2015-2016.  Asset classes from bonds to equities and from gold to bitcoin continue to trade in near precisely lockstep with the aforementioned time period.  Please refer to our second half 2019 outlook which can be found on our website https://oakharvestfg.com/2019-second-half-outlook/

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.