What’s on Tap: Calm Stock Markets Amid Lingering Concerns

  • Don’t Count Consumers Out: Walmart Reports 4% Quarterly Sales Uptick

  • Financial Planning Friday: Monitoring Your Credit

  • Looking Ahead to Consumer Confidence, Durable Goods and More

Markets worldwide continued to gain ground this week on ongoing assumptions of progress in U.S.-China trade talks and signs that Federal Reserve policymakers will stick to a wait-and-see approach before raising interest rates further.

If it feels as if the stock market has been calm of late, it has been. Market volatility is down—albeit from the relatively high level we endured at the end of 2018. The VIX index, known as Wall Street’s “fear gauge,” has declined in 23 of 35 trading days in 2019. The S&P 500 index and Dow Jones Industrial Average haven’t moved by more than 2% in a single day since the year’s first three trading sessions.

While it’s easy to say now, we also said it as it was happening: Investors and traders overreacted in the fourth quarter. The consensus view on a range of issues was so pessimistic that things didn’t need to get better to re-engage traders; they just had to keep from getting worse. That’s what we’re seeing eight weeks into 2019.

Merely not getting worse is not going to be good enough to power a further recovery in stock and bond prices, though. Investors will want to see actual progress on a variety of concerns—trade disputes, the Mueller investigation, Brexit, recession risks in Europe—and fundamental economic data that supports continued growth.   

For the year through Thursday, the Dow Jones Industrial Average has gained 11.2%, while the broader S&P 500 has returned 11.0%. The MSCI EAFE index, a measure of developed international stock markets, is up 8.8%. As of Thursday, the yield on the Bloomberg Barclays U.S. Aggregate Bond index has dipped to 3.20% from 3.28% at 2018’s end. On a total return basis, the U.S. bond market has gained 1.0% for the year.

Don’t Count Consumers Out: Walmart Reports 4% Quarterly Sales Uptick

Last week we discussed the lackluster December retail sales data, which showed sales declining 1.2% from the previous month. Despite the typically robust holiday shopping season, retailers faced a number of atypical year-end challenges, from the stock market’s dramatic decline to premature recession fears to the beginning of a government shutdown. One month’s slump does not a trend make; sales were up 2.3% compared to last December and grew 3.7% over the entire November-December holiday shopping season from the same period the prior year. Also, consumers may have just shopped earlier to take advantage of Black Friday and Cyber Monday sales.

In another sign that December’s retail pullback may have been more of a blip than meaningful indicator, Walmart, the world’s largest retailer, released its fiscal fourth-quarter earnings  report on Tuesday, showing sales at its stores increased 4% over the three months through January from the year before. The company’s e-commerce sales jumped 43% as more and more Americans grow accustomed to shopping from home.

We think that the bigger picture, when it comes to U.S. consumers, is that they are well-employed, confident and remain in fundamentally sound spending shape.

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 Financial Planning Friday

Monitoring Your Credit 

Just as your blood pressure and resting heart rate are good measures of your physical health, your credit score is a helpful (but not the only) indicator of your financial well-being. 

Creditworthiness directly impacts your pocketbook: Interest rates on your loans, your insurance premiums and even whether you receive a job offer may be determined by a credit check. Many people only learn how they score when applying for a loan or credit card. But regularly reviewing your credit score and credit reports can uncover trouble spots or suspicious activity before they get out of control. 

Credit scores and credit reports: What’s the difference? A credit report is an in-depth look at your credit history, showing the loans and credit lines you’ve taken out over time, as well as your payment history and current level of available credit, and can include any public records that shed light on your financial health (such as bankruptcy declarations, foreclosures or debt judgments). 

The three major credit reporting agencies—Equifax, Experian and TransUnion—each compile information from a variety of sources to generate their reports. Once they have the info, they each create their own credit scores—a single number lenders and others use when evaluating you as a potential borrower. 

You can review your credit report for free once every 12 months by requesting a copy at annualcreditreport.com. Doing so is not considered a “hard inquiry” on your credit and will not negatively impact your credit score. Reviewing your credit history gives you the opportunity to correct any mistakes (which will improve your score) and is an effective way to guard against identity theft. While the agencies often charge a fee to view your score, many apps available for your phone, such as Mint or Credit Karma, now provide free credit score features.

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Looking Ahead to Consumer Confidence, Durable Goods and More

After a few weeks of scant economic data, next week will bring heartier fare, with key reads on consumer confidence and sentiment; personal income, spending and savings; durable goods; inflation; manufacturing; the housing market (prices, permits, pending sales, construction spending and ground broken on new buildings); jobless claims; and the first estimate of fourth-quarter 2018 economic growth (GDP).

If you’d like to learn more about our tactical or fundamental investing strategies, please contact Steve Johnson at 844-587-7393 or info@bravercapital.com

Please note: This update was prepared on Friday, February 22, 2019, prior to the market’s close.

This material is distributed for informational purposes only. The investment ideas and expressions of opinion may contain certain forward-looking statements and should not be viewed as recommendations or personal investment advice, or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. 

Past performance is not an indication of future returns. The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. We do not provide legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. 

Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be seen as a recommendation to buy, sell or hold any of them.

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