“Say Anything”– Capitalism is Dead per the .0001% ers!!!
By Chris Perras, CIO
Equity markets posted gains last week with the SP500 closing within 1.5% of all -time highs. Looking back to the beginning of 2019, when we published our 1st half-outlook, investors were looking at a trade war with China, a government shutdown, falling oil, a 20% loss in the S&P 500 into Xmas eve, and globally weak economic data. Then, in early January, the Federal Reserve reversed course with a string of dovish monetary comments.
Fast forward three months, and oil prices are now near last year’s average price, and up over 40% since the start of the year. The S&P500 is less than 2% from its all-time high. The overall trend in economic growth has improved in recent weeks, particularly on the housing front. The U.S. government is still open for business. A U.S./China deal is appearing close at hand.
A titanic and swift shift in monetary policy expectations was the most important move in Q1. The Fed, and its chairman Jerome Powell, led this charge with his Jan 4th comments on being data dependent.
Alarmist rhetoric out of the financial press continues everyday. This weekend, the world’s largest hedge fund manager, and one of the richest .0001% Americans, who’s entire net worth has been derived managing other people’s money, declared that capitalism was in trouble. The TV networks, which are predominantly liberal leaning, soaked up this headline and spent the better part of Friday, the weekend, and today trumpeting this headline. OHFG believes that this is more John Cusak, “Say Anything” noise. Disregard these stories and headlines. The economy is fine, boring, and slated to improve in the second half of 2019 after a second quarter pause and pullback. Most of these stories come from a group of investors who panicked in the 4th quarter and sold stocks or those who have missed the sharp first quarter rebound induced by the Federal Reserves about face on interest rates and the economy.
We continue to believe that the 2h2019 and 2020 will be much more positive than others are forecasting. We will use any second quarter weakness in stocks and strength in bonds to continue to shift positions toward a second half acceleration in the economy and stock market. We will be posting our outlook closer to mid-year but expect us to continue to make some adjustments in advance of the second half. Until the 2h2019, “Rotation Nation” will be the general rule. Our first half 2019 market outlook and commentary can be found at https://oakharvestfg.com/2019-first-half-outlook/.
Sources for data include Bloomberg, Investor’s Business Daily, and other publicly available news sources. Weekly market updates contain general information and the views of Oak Harvest Investment Services. Content should not be regarded as personalized investment advice. Views and opinions expressed may change without notice. 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.