I can’t believe 2018 is halfway over. Does it feel like time is speeding up, or is that just me?
Every three months, we at Chicory Wealth take an in-depth look back at the markets during the last quarter, and we want to share that information with you. Below, I offer a brief summary of what we’re seeing and offer a link to more details. But before I jump in, I want to say that I realize some of you will be eager to read this analysis, while others of you may feel your eyes glazing over. We get it. If you just want someone to take care of this for you so you don’t have to think about it – we’re your team – feel free to read no further and leave it to us. Or, if you like just a taste of this kind of analysis but don’t want to get into the nitty-gritty, read the summary below. And if you like to see the charts and figures to go along with the analysis, by all means, follow the link below to the report we’ll be uploading to our website once a quarter. We’ve got you all covered.
So here’s my take on the market during the last quarter:
Overall, most indexes showed movement in a positive direction during the last quarter, at least in the US markets. We started the year with a 10% decline in the S&P, but overall the US has battled back during the second quarter. International stocks haven’t done as well, however, with most showing a slight loss over the last two quarters. Other investment categories like real estate, commodities returns, and bond markets yielded slight gains on average, for an overall positive return in the second quarter.
What does this mean? A quarter or two doesn’t mean much, as many forces play into these outcomes. The current bull market, which started in March of 2009, has been going on for a long time and seems to be showing signs of flagging. But it received at least a momentary boost from the recent tax bill (think of a pixie stick sugar high), and some believe this boost could last through the end of the year or maybe even longer. Currently, economic activity is up and unemployment is way down, with corporate earnings (with the lower corporate taxes factored in) are projected to increase roughly 25% over last year.
On the other hand, the Federal Reserve Board has raised short-term interest rates again, and has announced plans for future raises, the labor markets are super tight, and there is that pesky trade war (and other chaos) perpetrated by the current administration. Like most of you, we continue to feel cautious.
The economy has experienced five years of at least a small amount of earnings growth and the bull market has been around for almost ten years (old for a bull market), so most economists feel we are due for a slowdown soon. No one can predict the future of course, and even IF we wind up in a recession by 2020, no one can know for certain how deep or shallow that might be, or exactly when the market might begin to sell off in anticipation of this. To reiterate, overall we’re grateful for a “not too bad” second quarter, but we remain vigilant.
If you would like to read our full report on the second quarter of 2018, which includes some pretty nifty charts and graphs, dig in right HERE.
***In the photo above, Teddy contemplates the 2018 second quarter markets. Photo by Lucie Canfield***