Mark Levy’s Economic Update – Thursday, August 16, 2018

August 23rd, 2018 by Legacy Wealth Planning

Many of the phone calls I receive these days are conversations of concern. With our lives inundated by technology, social media, electronic screens (TV’s, computers and phones) and a constant news barrage of anything bad happening in the world, some people may begin to feel “disheartened”. If you have become one of these, know that while the world is very challenging, many good things are still occurring. Much of the good is coming from our economy. Today, the Dow 30 Industrial Average is up 423 points, trading at 25,588, a number not that far from its peak.

“But will it keep going up”, my clients ask. LPL Research (LPL), acknowledging that there are several potential stumbling blocks, believes that this bull market in equites may continue. Despite tariffs, trade wars, inflation and a flattening yield curve, LPL believes that our stimulative fiscal policy, increased government spending, robust corporate profits, strong consumer and business confidence and low inflation will win out.

What is unique about this bull market is that it is days away from becoming the longest bull market ever. Next week on August 22, this current bull can officially take the top spot as the longest ever. The longest, but not the greatest: at least not yet. The S&P 500 gained nearly 420% during the 1990s bull market when all was said and done, versus the current bull standing just over 320%.

Moving away from the markets, lets look at inflation. Surprisingly, as the economy continues to recover, inflation has emerged at a surprisingly slow and inconsistent rate. Inflation is a focal point for the Federal Reserve (Fed) in evaluating economic health in the U.S. and determining future monetary policy. The absence of significant inflation has apparently stumped the Fed. Last month, Fed Chair Jerome Powell said the risks to inflation are “roughly balanced”. But added that the Fed is “slightly more worried about low inflation still”, contradicting the Fed’s longstanding view that the U. S. economy is more prone to overheating. So, LPL believes it is conceivable that actual Fed policy (unless the numbers change greatly in an unforeseen way), may prove less onerous that current projections suggest, with potentially positive implications for investors.

The bottom line today is that corporate profits have been very strong and the fundamentals that LPL follows are solid. Market volatility, of course, can occur at any time, but as you know this is part of the process and we try to mute it the best that we can with diversification and balance. We hope that summer is going well for you and your family and please contact us with any investment questions you may have. – Mark

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Economic forecasts may not develop as predicted. Some of this research material has been prepared by LPL Financial. All indices are unmanaged and may not be invested into directly. Referenced material: LPL Research Weekly Market Commentary & LPL Research Weekly Economic Commentary, both dated August 13, 2018. Approved Tracking #: 1-761222.

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