FIRST QUARTER, 2019 COMMENTS AND OPINIONS
The U.S. economy grew at a solid 3.2% annual rate in the first three months of 2019, a far better outcome than expected, overcoming a host of headwinds including some global weakness, rising trade tensions and a partial government shutdown.
“The advance in the gross domestic product, the broadest measure of economic health, marks an acceleration from a 2.2% gain in the previous October-December period, the Commerce Department reported. However, about half the gain reflected two factors not expected to last – a big jump in stockpiling by businesses and a sharp contraction in the trade deficit.
“The first day of trading this April looked interesting, similar to the last week of this past March. During the last week of March, 2019, the Dow Jones Industrial moved higher by 426 points. During the first week of April the Dow gained 1.27%. The S&P 500 Index increased by 1.16%. That’s impressive when you think about where we were four months ago when stocks suffered their worst December since 1931. Newton’s First Law is ‘A body in motion will remain in motion until acted upon by an outside force.’ The S&P 500 is now just off its record high from last October.”
[SOURCE- ART HOGAN, CHIEF MARKET STRATEGIST, NATIONAL SECURITIES CORP.]
What outside forces now exist that are exerting pressure on our economy and the markets? At first glance there are no storm clouds in the sky and no rumbles of thunder in the distance. Outside forces that usually move markets and economies are interest rates, inflation, tax law changes, domestic and international trade, fear or greed. Right now both interest rates and inflation are tame. The recent Federal Income Tax decrease has benefited our economy. Whenever taxes are increased, more of our income is directed to government spending. Whenever our taxes are decreased, more of our income is ours to keep and spend as we wish. An issue that may impact the stock market is the ongoing trade negotiations with China.
All markets go through cycles. That’s just the fact – Jack. The stock market is the market followed most frequently. The Standard and Poor’s 500 Index has grown on average by about 10% per year over the past 90 years. This includes the depths of the Great Depression and all of the boom times. For those who understand these ups and downs and are willing to not sell out at the bottom and then buy back in at the top, stocks can be an asset class well worth holding and adding to throughout one’s life.
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