The Interactive Financial Advisors team would like to say thank you for your business! We want to take time to review the last year in the market, particularly December, due to the volatility we’ve experienced. IFA is here to make your life better. It’s your money, and you need to be comfortable and informed on the economy.
There have been both positives and negatives in the market throughout the year.
The positives include that the economy is in good shape. In November 2018, the market recalibrated to manage the growth we’ve experienced. Job growth is steady and solid. Unemployment was at 3.7%, the lowest since 19692,3. The 2018 third quarter Gross Domestic Product earnings are up 3.4%12,14. Other fundamentals are good including autos, heavy trucks, and shipments8,11,13. Oil prices are down as well, which is good for the consumer and spending5,10. 2018 Holiday spending was up 5.1%, the most in 6 years6. Although the economy has slowed, it is not down.
However, there are a few negatives. The housing market is in a downturn1. The global economy is starting to slow4,15. Uncertainty surrounding tariffs have influenced the market. Staff turn-over in Washington D.C. is also an uncontrollable factor that has caused volatility. There is one more expected interest rate hike from the Federal Reserve in 20197.
The S&P Dow Jones Indices show that the S&P 500® is down nearly 14% for the quarter, and down 4% for 2018. The S&P MidCap 400® is down 17% for the quarter and down 11% for the year to date. SmallCap 600® is down 20% for the quarter and down 8% for the year. S&P Composite1500® is down 14% for the quarter and down 5% for 2018. The S&P Developed Ex- U.S. BMI is down 13% for the quarter and 14% for the year9.
We want to reach out and let you know how we handle the unpredictability. We want to make sure that we communicate with you to know what your goals are and help you accomplish them. Our diversified portfolios are created for all market conditions, so you are prepared to handle pullbacks of any level. We examine client’s portfolios against their goals on an ongoing basis and have tools to manage different risks, including different market exposure levels, diversification, rebalancing, kill switches, and stop losses. We use tactics to have the money available to you when you need it. We ensure that our portfolios work to meet your goals.
Regardless of the tools we have in place, there will be changes seen on your statement. Please reach out to your advisor if you have any questions. We are here to work with you to make your life better.
1Achuthan, Lakshman. “Housing Market Is Raising Serious Red Flags.” Bloomberg.com, Bloomberg, 15 Oct. 2018, www.bloomberg.com/opinion/articles/2018-10-15/housing-prices-may-have-entered-a-cyclical-downturn.
2Chandra, Sho. “Jobless Claims in U.S. Decline to Lowest Level Since 1969.” Bloomberg.com, Bloomberg, 19 July 2018, www.bloomberg.com/news/articles/2018-07-19/u-s-jobless-claims-dropped-last-week-to-lowest-level-since-1969.
3“Employment Situation Summary.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, 7 Dec. 2018, www.bls.gov/news.release/empsit.nr0.htm.
4Hatzius, Jan, et al. “Landing the Plane.” Goldman Sachs, 14 Nov. 2018, www.goldmansachs.com/insights/pages/outlook-2019/global-outlook/report.pdf.
5“How Falling Gas Prices Fuel the Consumer: Evidence From 25 Million People.” JP Morgan Chase& Co Institute , Oct. 2015, www.jpmorganchase.com/corporate/institute/report-how-falling-gas-prices-fuel-the-economy.htm.
6“Mastercard SpendingPulse: U.S. Retail Sales Grew 5.1 Percent This Holiday Season.” MasterCard Social Newsroom, Mastercard, 26 Dec. 2018, newsroom.mastercard.com/press-releases/mastercard-spendingpulse-u-s-retail-sales-grew-5-1-percent-this-holiday-season/.
7Miller, Rich, and Liz Capo McCormick. “The Fed Is Likely to Take a Rate-Hike Breather in 2019.” Chicago Tribune, Chicago Tribune, 21 Nov. 2018, www.chicagotribune.com/business/ct-biz-fed-2019-interest-rates-20181121-story.html.
8“MONTHLY ADVANCE REPORT ON MANUFACTURERS’ SHIPMENTS, INVENTORIES AND ORDERS NOVEMBER 2018.” United States Census Bureau, U.S. Department of Commerce , 21 Dec. 2018, www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf.
9“S&P Dow Jones Indices .” S&P Gobal, 31 Dec. 2018, bit.ly/2VpPeoA.
10Sir- Kumar, Komal. “Markets Are Signaling Higher Odds of a 2019 Recession.” Bloomberg.com, Bloomberg, 2 Jan. 2019, www.bloomberg.com/opinion/articles/2019-01-02/markets-signal-higher-odds-of-a-2019-recession.
11“US Auto Sales Set to Top Analyst Estimates for Year.” CNBC, Reuters, 3 Dec. 2018, www.cnbc.com/2018/12/03/toyota-honda-us-sales-fall-in-november.html.
12“U.S. Bureau of Economic Analysis (BEA).” U.S. Bureau of Economic Analysis (BEA), Bureau of Economic Analysis, 12 Dec. 2018, www.bea.gov/.
13“US Heavy Truck Sales:” YCharts, 21 Dec. 2018, ycharts.com/indicators/us_retail_sales_of_heavy_trucks_sa.
14“U.S.: Real GDP Growth by Quarter 2011-2018.” Statista, www.statista.com/statistics/188185/percent-chance-from-preceding-period-in-real-gdp-in-the-us/.
15Zumbrun, Josh. “IMF Lowers Global Growth Forecasts for 2018 and 2019.” The Wall Street Journal, Dow Jones & Company, 9 Oct. 2018, www.wsj.com/articles/imf-lowers-global-growth-forecasts-for-2018-and-2019-1539048878.