Market Comments for Friday February 15th, 2019
First Advisors Capital, Inc. (FAC)
The Dow industrial's rose 1.7% today, while the S&P 500 added 1.1%. All 11 sectors in the broad index notched gains. FAC's average managed portfolio within both TD Ameritrade and Folio Institutional, on an average aggregate basis, net of all fees, participated within approximately 70%* to 80%* of the S&P 500 Index this week with average cash / bond holdings still at of approximately 28%* to 38%*.
The Wall Street Journal reported that the President Trump and trade negotiators defused some of the tariff-related tensions today as Mr. Trump said the U.S. is close to a deal with China, while negotiators said they agreed to further talks next week in Washington after discussions in Beijing. Still, sharp divisions between the two sides remain, with the U.S. complaining that China pressures American businesses to share technology and that its policies favor state-owned companies.
The stakes for the world economy are high, with Citigroup analysts predicting that 2019 global growth could be 0.2 percentage point slower if a deal isn’t reached. Fears of escalating trade tensions and high tariffs shook global stock markets in late 2018, and many analysts worry that recent stock gains could be vulnerable if negotiations between the U.S. and China fall apart.
From a technical standpoint, market breadth is still firm. At the same time, buyers continue to outweigh sellers and distribution within the market continues to ease.
The economic data has been mixed. The latest survey of Small Business Optimism from the NFIB fell for the fifth month in a row and is now at the lowest level since November 2016. Retail sales tumbled in December, falling by the largest amount in nine years, while the producer-price index, a gauge of prices at the factory gate, edged up 0.1% in January, slowing from a 0.9% gain in December.
On a positive note, the preliminary February reading for Consumer Sentiment from the University of Michigan improved substantially, with most of the gain coming from an improved outlook for the future.
A more dovish Federal Reserve monetary stance is positive for equity markets. However, considerable risks remain, including rising recession risk, a slowing housing sector, uncertainty relating to trade agreements, and ongoing political posturing in Washington. FAC management will continue to monitor the situation as these and other systemic factors develop.
It's generally assumed that most investors look at progress based on recent events, which psychologists call the "recency" effect that can dominate much of our decision making. When it comes to investing, it's a good practice to be aware of this and not allow it to influence your long term goals.
*Please do not use these above stated returns and cash/ bond weightings or index comparisons as a proxy for your individual account(s) performance, or allocations, as they may be more or less based on various aspects of your account including, but not limited to allocation and time horizon structure. Please contact your FAC Adviser to obtain your actual rates of return and cash / bond allocations, which will change daily.
Investing is a long-term undertaking and therefore short term movements may not be indicative of longer-term results. If you have any question, additional concerns, or if your situation has changed that may effect your present risk tolerance, liquidity needs, financial needs or goals, please contact your FAC Adviser or FAC directly at. 205-991-8484 Thank you!
First Advisors Capital, Inc. (FAC) is an Investment Adviser Registered with the State of Alabama. 4956 Valleydale Road Suite 203 / Birmingham, AL 35242 / 205-991-8484
The information contained herein has been obtained from sources believed reliable solely for informational purposes but, is not necessarily complete and cannot be guaranteed. This communication may contain inaccuracies or typographical errors. First Advisors Capital, Inc.(FAC) does not render legal, accounting, or tax advice. Where performance* data is shown, past performance is not an indicator of future results, and personal actual results may vary, and therefore should not be depended on or used as a substitute for any FAC client actual holdings or investment performance. This communication may contain non-public, proprietary, confidential or legally privileged information. Please contact FAC to obtain the additional disclosures necessary to make an informed decision including but not limited to FAC's: Adv. 2a, 2b, FAC Client Investment Agreements, Fee Schedules, Fact Sheets, and other important disclosures and disclaimers, before you invest. Investing involves risks including permanent loss of principal.