Good News, Bad News
It appears as though good news in the economy has become bad news for the markets. Positive economic data pushes up interest rates because a higher GDP growth leads to higher rates. People are worried that the Fed will be too aggressive. This leads to people selling out of stocks and bonds, causing asset prices to change. Looking at last Friday, we had a great jobs number and positive wage growth. Then the Atlanta Federal Reserve projected over a 5% GDP growth in the first quarter. This would be extremely positive. It is really a matter of give and take between aggressiveness of the Fed and how the market will react on that news.
Around 10,000 jobs were created either in warehousing or in manufacturing transportation that was led by E-commerce. Americans have the tendency to find better ways to do things. This is evidence of that occurring. These numbers are coming just in the month of January and this is something that you wouldn’t have seen 10 years ago.
Recently, we have had emails and phone calls regarding volatility. There are some reasons why we think you shouldn’t read too much in to this. If you look underneath the hood, the economy is very strong. We have low unemployment, higher wages, a strong housing market and consumer confidence is at an all-time high. The S&P 500 experienced an average entry year decline of 14% from 1980 to 2016. Of those 36 years, 27 of them the market ended up. Also, 80% of S&P companies are still in an uptrend. Volatility is back but we are not overly concerned at this time.
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.
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