There was a large pull down in the markets on Friday. Most of the time the market goes up and down based on corporate and economic news. If you are a short term investor, you don’t want to be overexposed going into a weekend when you don’t know what will happen. In the past we have seen that in between Fridays’ close and Mondays’ open not much can happen. However, that is not the case today. With that much risk, we saw a lot of people going to cash on Friday. This wasn’t because the news was bad, but rather the unknown of what could happen. This likely exacerbated the pull down in the market.
Concerns and Facts
From a client’s standpoint, seeing the news and the volatility in the markets causes concern. For example, Steve Mnuchin said last week that we could end up in a trade war with China. These sort of phrases can cause motion in the markets and knee-jerk reactions by investors. We know that some of the main topics that people are focused on are technology companies and technology stocks. They are looking to see if these will continue to grow, if they will be under more regulation and if their earnings will start to decline. The Trump administration is using protectionism that ties in to China trade wars and tariffs. It will also be interesting to see if the Fed will continue raising interest rates and if they raise them too quickly.
Trade war talks continued last week. We ship 130 billion in goods to China while China ships us 505 billion. The list is a lot longer for the U.S. to put tariffs on, which is in our favor. One thing that’s not in our favor is politics. We have a midterm election coming up while China’s President has a lot of time left in his term. Politics play a big role in volatility. We do have what we think and hope could be some relief. Earning season kicks off this week. NAFTA talks and trade with Mexico and Canada are really progressing quicker than most expectations. Hopefully, these topics can drown out the noise of trade war talks. In other words, we hope some real data can take the place of some of these rumors.
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.