The first quarter has come to an end. A lot of the first quarter consisted of volatility, politics and trade war talks. The S&P 500 posted its first negative quarter since 2015. Earning season will start in a couple weeks. Hopefully, tax cuts will lead to more share buybacks and higher dividends.
The narrative of the market has really been driven by technical analysis. There are two sides of market research. One side is technical analysis that consists of numbers, momentum and the trends of the market. The other side is fundamental analysis which consists of earnings, GDP and how things are being made. We have had a long period of time with no fundamental drivers. In the meantime, the technical side has really taken over. One example of this includes the S&P dropping near its 200 day moving average. We are going to need a lot of strong, unpredictable fundamental data in order to veer away from the technical side.
One example of fundamental data that has been flying under the radar is the Mark Janus case in Illinois. If you are a government worker and don’t want to be in a union, the union can still deduct its dues. This case aims to change that. If this case rules in favor of Mark Janus then a huge amount of discretionary income could become available for government workers at the end of the year.
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