The Election Spooked the Markets Friday after FBI Clinton Email News
It was assumed that the GDP data that came out Friday would be the biggest news of the day. The market reacted positively to those numbers as you can see in this chart from Market Watch. The S&P 500 held strong until around 1pm when the news came out about the FBI email investigation concerning Hillary Clinton. At that point the elections spooked the market which immediately fell off. What we saw was the GDP number for the world’s largest economy be overshadowed by an FBI investigation. The market lost all its momentum proving that this election is what is controlling the markets. We cannot wait for these next eight days to be behind us and we can look at the real numbers of GDP and earnings instead of election news that continues to spook the markets.
Don’t miss the GDP growth
GDP came in at 2.9% which is better than the 1% growth we had at the beginning of the year. It’s the best growth we’ve seen in 2 years (See chart). Not only is GDP up, it is more balanced than it has been in the past few years. For the last couple of years the consumer has really been carrying GDP. We are excited to see some of the corporate numbers come up about 5.4% on expenditures, like warehouses and factories, which are long term commitments. Even though capital equipment expenditures have dropped 2.7%, it is still the best it has been in the last several quarters. Going in to the end of the year and the new year, we will have a more balanced GDP that we have needed for some time.
The soy bean anomaly
Interestingly, US soy bean exports picked up last week and there are questions to whether this is a one off or if exports are picking up. The problem is that South America has had a very bad crop which caused our soy bean exports to unusually pick up.
What the Fed is looking a
The Fed will be looking at the GDP number as they meet tomorrow and also at the jobs report that comes out this Friday.
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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.
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