Post Super Tuesday impact on the markets
Tomorrow is Super Tuesday. Up to this point the markets have not responded at all to the elections because the race has been very splintered. After tomorrow we will see a narrowing of the field and the market will start pricing in a more likely winner. The market could react to the candidates who begin to talk deeper about their economic proposals. We’ve already started breaking down the different tax policies and ideas these candidates have and how they could impact your portfolio.
Boy, are we glad to see inflation!
The PCE (Personal Consumption Expenditure), which is the Federal Reserve’s favorite inflation gauge, was up 3% in January with some surprising estimates. We never thought we would be glad to see inflation rising but we need this in the economy to fight deflation.
When good news is bad news for the markets
Several pieces of data came out last week that could impact the Fed’s decision to raise interest rates again. Last week saw inflation rise, oil prices surge 10%, GDP get revised up for the fourth quarter, home sales rise to a six month high, and a consumer spending increase. All this data gives the Fed a little more ammo than they have had in the past to raise interest rates. The market at this point is not planning on that happening. If the Fed keeps talking about raising interest rates because of this data, it could create a lot more volatility in the markets. Again this is a case where good news in the economy can create bad news for the markets.
Staying defensive in our portfolios
We are watching closely to see what the Fed and all the central banks are doing as their actions have been creating distortions in the markets. If they continue to talk about raising interest rates, we will continue to see more volatility in the markets. This is why we are currently more defensive in our clients’ portfolios.
Thank you for your comments, opinions, and feedback. Please keep them coming.
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Trey Booth, CFA®
Email Trey Booth here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy can ensure success or protect against a loss
Stock investing involves risk including potential loss of principal.