Oak Harvest: Market Update – Jan 28, 2019

By Chris Perras, CIO

Late last week, President Trump signed a bill reopening parts of the U.S. government until February 15th and levitating the SP500 back to 2665, or flat with Dec 31, 2017. Since the government has been closed for over a month, most economic data has been delayed. We expect most of the coming data to reflect the slowdown that has been going on since late 1qtr 2018.

Global equity markets were mixed last week with most markets eking out small gains. The SP500 dropped -.2%, and Germany rose .7%. Semiconductor stocks led the market and tech sector higher, while drug stocks dropped as investors sold sectors with more stable growth characteristics.

Early this week the focus for most markets will be on 4th quarter 2018 earnings calls which we expect to be delightfully cautious. Delightfully, because opposite 1st quarter 2018 when growth and most stocks peaked, we expect 2019 to play out in an opposite fashion with growth accelerating the 2nd half of the year and the bull market resuming its run. We will be listening to calls, reading transcriptions, and adjusting where we see opportunity.

U.S.- China trade talks resume in DC on Wednesday and while there is uncertainty to the specifics, we believe a handshake agreement is close. This would be positive for the market as the dollar would decline and most export driven stocks and international focused ones would rise.

Additionally, the Federal Reserve will conclude their only 1st quarter meeting on Wednesday and release their policy statement. Since late December, even the most hawkish Fed members have started preaching patience on the rate of 2019 interest rate increases. We expect continued cautions, and bullish, Fed commentary. However, we do not expect concrete announcements on their balance sheet reduction path until mid-summer.

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 and are current as of the date of posting. Content should not be regarded as personalized investment advice. Views and opinions may change based on new information or analysis. 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.