What’s happening out there? Is it the trade war? Is it the Fed? What about European politics and the weeks-long “yellow vests” protests in France? Whatever it is, it is risk-off. It’s not good for any stock market, virtually anywhere Thursday morning.
The S&P 500 tested February lows on the Monday before Christmas, fell below those lows on Tuesday before moving higher by the end of the day, then fell on Wednesday with the Fed taking all of the blame despite the fact that everyone knew it would hike interest rates. The S&P 500 remains below the 50 and 200-day moving averages and was down 1.54% at the opening bell. The news flow for the past several weeks has been positive. There’s a trade war cease-fire for 90 days. And yesterday the Fed was at least marginally dovish, though two more rate hikes are in the cards for 2019, a potential negative. The volatility markets (think VIX) don’t yet suggest the big money is ready to be swept off the table. It’s not the summer of 2008.
The New York Times reported on a recent editorial survey of more than 100 business leaders, where almost half of the respondents said the U.S. could be in recession by the end of 2019. That’s a bit misguided. Sometimes the collective in the markets do a better job forecasting a turn in the economy than forecasters and policymakers. This was true in 2008 as well. Perhaps this is one of those times. Experienced analysts in New York say they are skeptical of the overly bearish sentiment driving markets. They don’t think the U.S. becomes recessionary next year.
Despite the mini-meltdown that has taken place since the midterm elections in November, the health and confidence of the U.S. consumer and small business remain high, albeit less high than a few months back. The Philadelphia Federal Reserve's Manufacturing Index weakened to its lowest level in two years on Thursday. Fiscal stimulus is wearing thin. The trade war is on hold and may even end next year, meaning no new tariffs, not necessarily the removal of those tariffs already in place.
Concern for the market isn’t off-base, but it isn’t doomsday or the next recession. Consumer and Industry Index scores are high, and that’s because America’s small businesses are growing as investors move into the lower middle market more and more each day. SA Capital Partners has worked in the lower middle market for some time now, and knows how to navigate seemingly troubling times as well as help you thrive no matter what’s happening to big business. Let their tools for capital raising, merger and acquisitions, and more be your tool to overcoming political uncertainty.
About SA Capital Partners:
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