Global Market Commentary

Strong Growth Continues

Strong Growth Continues

Friday, March 9th marked 9 years since the US stock market bottomed during the Great Recession of 2008-2009. We have witnessed excellent stock market and economic growth since those dark times, leading many people to ask the question: “How long can this expansion/rally continue?”

Before we answer that question, a short stock market history lesson is in order. While the US stock market has in fact rallied an incredible 380% since the stock market bottom (as measured by the total return of the S&P 500 Index), it has not been without significant drawdowns:

  • From July 7, 2011 – October 3, 2011, the S&P 500 Index lost 18.4%. During that same time period, the global stock market (as measured by ticker ACWI) lost 22.5%.
     
  • From May 19, 2015 – February 11, 2016, the S&P 500 Index lost 12.8%, while the global stock market was down 19.1%.

So, there have been “breathers” (that’s a nice way of putting it) during this period of sustained economic and stock market growth. In other words, we have taken our lumps along the way.

Employment Market Signals Strong Economy

Employment Market Signals Strong Economy

Quiz question: when was the last time initial jobless claims were as low in the U.S. as they are today?

Answer: 1969.

Think of that: by this metric, it’s been nearly 50 years since the U.S. labor market was this strong. The headline unemployment rate has been steady for a few months at 4.1%.

The initial jobless claims report is released weekly by the U.S. Department of Labor. “This report measures the number of jobless claims filed by individuals seeking to receive jobless benefits.” The latest reading came in at 210,000:

The Stock Markets go up and come down and go up…

The Stock Markets go up and come down and go up…

As I write this, it looks like the U.S. stock market (as measured by the S&P 500) will finally get something that happens, on average, about once a year: a 10+% percent drop—the definition of a market correction.  The last time this happened was two years ago, ending in February of 2016.  The drop that tends to stick in our minds was a whopper—the Great Recession drop that caused the S&P 500 to drop more than 50%--so many of us today probably think corrections are catastrophic.  They aren’t.  More typically, they last anywhere from 20 trading days (the 1997 correction, down 10.8%) to 104 days (the 2002-2003 correction, down 14.7%).  Corrections are unnerving, but they can be a healthy part of the economy—for a couple of reasons.

Corporate Earnings Continue to Excel

Corporate Earnings Continue to Excel

Media headlines focus on the news of the day. The key word there is "day". These are typically issues that will cause a firestorm for a brief period of time, and then go off into the dustbin of history. Fine, let them cause a ruckus.

Sure, sometimes the news of the day can stretch out to become news of the week. But really, most of the media attention is focused on issues that are here today and gone tomorrow.

Small Business Optimism

Small Business Optimism

The National Federation of Independent Business (NFIB) is America's leading small business association, with more than 325,000 small businesses members throughout our great country. You have heard it said that small businesses are the lifeblood of the American economy. This is because small businesses:

  • Represent 99% of all employer firms.

  • Employ about half of private-sector employees.

  • Generate 63-80% of net new jobs annually (i.e. job growth predominately flows out of small businesses).

  • Create over half of private GDP (excluding farming).

Global Interest Rates

Global Interest Rates

I have an exciting investment opportunity to tell you about. Here's how it works:

  • Today, you will invest $13,400 to buy a $10,000 Swiss bond.  [note: that is not a typo. You are paying a 34% premium over face value of the bond]
  • I will buy you a $10,000 Swiss bond that pays you 3.25% simple interest each year ($325 of annual interest).
  • At the end of 10 years, you will get your $10,000 back.