The first quarter of 2019 proved to be a strong one. The S&P 500 posted a 13.1% gain (the highest quarterly gain since 2009), the Dow Jones Industrial Average rose by 11.15% and the Nasdaq increased by 16.5%. Bond investors in both developed and emerging markets saw three consecutive months of positive returns. Oil prices enjoyed a strong start to the year, and corporate bonds and commodities also experienced gains.
Europe got off to a rocky start to the year, but there were still positive signs:
The biggest surprise of the first quarter was how well the markets recovered from the precipitous drop at the end of 2018. Despite uncertainties related to the U.S. and China trade war and concerns about a slowdown in Germany, the United Kingdom, Canada, France and Italy, the recent policy response from the Federal Reserve proved to be a confidence builder for investors. The Fed acknowledged that it was unlikely to raise interest rates further this year while the European Central Bank, the Bank of Japan and the People’s Bank of China initiated moves to stimulate their economies.
While investment sentiment remains positive and the news is good, it’s important to focus on your personal portfolio. The goal for most investors isn’t to outpace the market, but rather to achieve a return range that is on track to meet financial goals without taking undue risk. If you’d like a review of your current financial situation, please give us a call.
As for the rest of 2019, some of the indicators are pointing to the chance of a recession. JP Morgan’s global markets strategy team points out that U.S. stock markets look as if they’ve priced in a 15% chance of a recession. Further, the U.S. corporate debt markets have factored in a 10% to 25% chance and treasury markets are signaling about an 80% chance.
However, other key indicators point to a continuing healthy U.S. economy. The nation’s gross domestic product is expected to grow between 2% and 3%, which is considered ideal; unemployment is forecast to continue at a “natural” rate; and inflation and deflation are under control.
The banking industry is expected to see positive influences in 2019, but some analysts are predicting a slowdown in 2020. They are citing factors including the fact that fewer companies are borrowing from banks because they have more money on hand. Possible reasons include the recent tax legislation that helped U.S. corporations have more cash in their coffers; or companies may be stockpiling cash and taking on less debt as a hedge against a possible recession.
Content prepared by Kara Stefan Communications
1 Ian King. Sky News. April 2, 2019. “Market strategists signal caution after strong first quarter.” https://news.sky.com/story/market-strategists-signal-caution-after-strong-first-quarter-11681559. Accessed April 1, 2019.
5 Kimberly Amadeo. The Balance. March 27, 2019. “US Economic Outlook for 2019 and Beyond.” https://www.thebalance.com/us-economic-outlook-3305669. Accessed April 9, 2019.
6 Deloitte. 2019. “2019 Banking and Capital Markets M&A Outlook.” https://www2.deloitte.com/us/en/pages/financial-services/articles/banking-securities-mergers-acquisitions-outlook.html. Accessed April 1, 2019.
Advisory services offered through Lake Point Wealth Management, LLC, an SEC Registered Investment Adviser. Insurance products and services offered through Lake Point Advisory Group, LLC. It is important that you do not use e-mail to request, authorize or effect the purchase or sale of any security or to effect any other transactions. The information transmitted herein and any attachments or files transmitted herewith may contain proprietary, confidential and/or protected, non-public information, are covered by applicable state and federal laws and are intended solely for the use of the individual or entity named above as the intended recipient. If the reader of this message is not the above-named intended recipient, or his/her/its agent, be advised that any review, disclosure, dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please immediately notify the sender by telephone or e-mail and destroy the material forwarded in error. Nothing in this communication shall constitute an offer to sell or solicit any offer to buy a security or any insurance product. Recipients should be aware that all emails exchanged with the sender may be archived and may be accessed at any time by duly authorized persons and may be produced to other parties, including public authorities, in compliance with applicable laws.