Market Momentum
When you hear the market is up and at an all-time high it is very important to pay attention to exactly what they are referring to when they say “market.” Over the last two weeks the DOW Jones Industrial Average, composed of 30 stocks, is up over 500 points. The S&P 500 and Nasdaq are flat and down respectively. So, when talking about the market, this can vary depending on what the returns actually are. Since the DOW is composed of 30 stocks, also price weighted, certain stocks can have a large outside impact depending on their prices. Currently, Boeing is over 7% and Apple is over 4% of the DOW Jones Industrial Average. We aren’t making recommendations to buy these stocks but are trying to emphasize how these aren’t necessarily a reflection of the entire market, thus referencing back to our title “Good News, Bad News.”
Jobs Number
On Friday, the news was reporting a great jobs number. As representatives, we always like to read the full report. After reading the full report, we found some numbers that weren’t quite exciting as the news was reporting. One number that was concerning was that part time jobs rose by 393,000 while full time jobs fell by 54,000 and wages were flat. We are seeing a declining consumer spending number and this is probably why. With a lot of people having part time jobs while wages are flat indicate a bad trend.
Consumer
We are not getting any wage growth. Wage growth is only up about 2.5%. What’s causing this is that the consumer has been starved since this market run-up. The consumer is using more savings in order to keep up. If you look back at 2015 and 2016, the savings rate was around 5% to 6%. Right now the savings rate is sitting around the 3% area. This might be a great area for tax reform to attack if we can get the savings rate as well as the growth rate back up.
Moving Forward
Historically speaking, August and September are the worst months of the year in terms of performance. People are starting to come back from vacation and there is low volume. We read a report recently that 2 of the last 20 August months were up. There is not a lot of “seasonable” favorability coming behind the market right now. We are thrilled that the market is going up but are keeping a close eye on it due to this type of data and looking from a historical standpoint.
Greg Powell, CIMA®
President and CEO
Wealth Consultant
Email Greg Powell here
Bobby Norman, CFP®, AIF®
Senior Vice President
Wealth Consultant
Email Bobby Norman here
Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here
Trey Booth, CFA®, AIF®
Senior Vice President
Wealth Consultant
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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