Possible record high on the DOW
The big topic concerns whether or not the DOW will hit 20,000. We are getting questions from our viewers asking, “Can this rally be sustained?” The DOW has moved a long way very quickly and even though it is close, this is a low volume week.
Historically, this is a very good week for the markets. Since 1928 the markets have increased 1.14 percentage points which would get us over 20,000. This year may be more beneficial than most because, without giving tax advice, people may be anticipating a tax cut next year. Common sense tells us that people could be thinking of not creating a taxable event this year when they could be getting a tax cut next year. This could give us more buyers and fewer sellers which could give us that final push.
A strong dollar equals an interest rate hike
There are some headwinds out there that could help sustain this rally. Increased mortgage rates and the strength of the dollar are two of them. The huge run up of the dollar has done more than when the Fed recently raised interest rates. The strength of the dollar over the past few months is equivalent to a .005% point interest rate hike.
Gas prices equals a tax increase
You may have noticed the $0.52 increase in gas prices as you were doing your last minute Christmas shopping this past week. Statistically, a $0.52 jump in gas prices is equivalent to a $60 billion dollar tax increase. That has an immediate impact on the consumer’s bottom line.
What could take steam out of the markets?
We are seeing corporate earnings getting better. At the same time, there are some other indicators out there that eventually could take some steam out of the market. Everyone gets excited about inflation as it helps earnings and the markets, but for the consumer it can have a negative impact. Remember that this gas price increase is a quick move up and OPEC has not even cut barrel one yet.
We will keep you updated and we hope you have a great week and a happy New Years.
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Greg Powell, CIMA
Email Greg Powell here
Trey Booth, CFA®, AIF®
Senior Vice President
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.
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