Client Questions
Clients have recently asked why we overweight portfolios in U.S. stocks as opposed to international stocks. A lot of that reason is that we have one of the best economies and one of the strongest markets out there. If you look overseas starting with Europe, you’ll find that they are in a mess with Brexit being an unknown factor right now. Germany is in a technical recession and has been hit hard by the auto export slow down. In fact, a large automaker in Germany announced a 10,000-job layoff last week. China’s still feeling the pain of the U.S. trade war and if you look back at India three years ago, they had a growth rate of 9% which was a big increase, however, that has been cut in half. They, too, have been hit by the auto export decrease and had a slowdown in the last six consecutive quarters.
Growth in the Numbers
When looking at the U.S. compared to the rest of the world, all you have to do is look at this past week. Germany and Japan are near recession and Europe is near complete collapse. Here in the U.S., we kicked off one of the strongest shopping seasons we’ve had in years which is driven by a strong dollar. Our interest rates appear to be low, but they’re actually high when compared to other negative interest rates internationally. If money is flooding into the U.S. keeping our dollar strong, it helps the U.S. consumer. We saw a 19.6% increase in Black Friday online sales and a 14.5% increase in Small Business Saturday and Super Sunday sales. We’re expecting a 19% increase in Cyber Monday sales across the board which shows major double-digit growth in the U.S. consumer. That strength is caused by a strong dollar allowing us to buy more. Our interest rates and our market is very attractive so if you’re investing, this is the only real place to invest to protect yourself against a potential future increase in inflation in the U.S. We feel that if you’re going to get exposure, get it here where there are consistent strength and consistent demand. We see international money coming to the U.S. and not U.S. money going out internationally. That overall is one reason we’ve stayed so heavily concentrated in the U.S. markets.
Consumer-Driven
It’s not a lie when we say there was anxiety in the markets last December. We saw it firsthand. The one thing that has really driven us this year has been the consumer. The consumer has given us a lot of optimism going into December this year as well as going into 2020. Consumer sentiment was up over 95 and has been up 30 of the last 35 months which is the longest level of optimism since 1998-2000. That’s two decades. We’re seeing the consumer really drive this market. Small business optimism is coming back around and we’re getting a lot of other good indications as the U.S. and China trade deal continues into December. All these positive economic indicators are sort of relieving the anxiety that we had last year around this time and we are hoping that it will continue.
Strong Finish
Last week the Federal Reserve chairman, Jerome Powell, summarized things when he said that the U.S. economy is a glass that is more than half full as opposed to the international glass which is currently very empty. The U.S. ended up doing better in the third quarter than was expected. One of the things to remember from last year is that we had a little bit of a government shutdown for two or three weeks that did not help the markets at that time. The government is back spending money this time around. We got wind of that in the recent sales numbers. Towards the end of 2018, we had a lot of volatility, a lot of negative news headlines and the government shutdown all working against us. This time, as we get ready to close 2019, we feel like December is already looking very strong with the consumer and we have a lot of positive things going on compared to the rest of the world.
Greg Powell, CIMA®
President and CEO
Wealth Consultant
Email Greg Powell here
Bobby Norman, CFP®, AIF®
Managing Director
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
Adam Vansant, AIF®
Associate Vice President
Wealth Consultant
Email Adam Vansant 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.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.
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