The Markets: The S&P 500 index closed October positive 2.91%. The Dow gained 1.77% and the NASDAQ finished the month 3.88%; according to the Wall Street Journal.
The selling during the first few days of October dragged the benchmark back to where it stood 21 months prior. President Trump loves touting stock market returns, and no doubt his Presidency has had solid returns gaining 43% since his election. However, as of January 2018, his returns stood at 43%. The markets have had great ascents and magnificent descents since that time winding up, for all practical purposes, just slightly ahead of where they stood almost 2 years ago.
The Economy: Trump’s tax cuts giveth, Trump’s trade war taketh away was the rhetoric early in the month. The # 1 thing to worry about that causes recession is business confidence. With some softening in economic numbers worldwide, folks spent most of the month worrying about recession. The facts show some softening, yet only about 1 of every soft period actually turns into a recession.
Historically the key indicator is hiring freeze and eventual layoffs; we have not seen indications of this yet. We have seen economic policy uncertainty however; the “4 horsemen” as some market gurus call them are okay currently. Who are the 4 horsemen?
- Home Building
- Capital Spending
- Vehicle Sales
- Inventory
Trade Wars:Rhetoric has softened a bit and President Trump’s position that exports matter less to the US than anyone seems to be accurate and putting pressure on China to work some framework out with the US
Politics: With the House vote to proceed with the impeachment process, we cannot handicap what will happen as we move toward election. The most recent projections we have read indicate that there will not be a big lurch in policy left or right: the Senate should remain Red. The most vulnerable areas are Maine, Colorado, Arizona, North Carolina and Alabama which most pundits expect they will keep most if not all.
Have a question? Let me know! Email me at kcompton@wsmtexas.com.