Principled Thoughts


In January, the bull fought back and the market posted the best January return in 30 years

Pipe

January brought welcome relief to investors, as a strong labor market, low inflation, and a more patient Fed reminded markets that underlying fundamentals remain strong. During January, the Standard and Poor’s 500 Index experienced a 7.9% rally, its best January return in over 30 years. Small caps as measured by the Russell 2000 Index, posted a double digit 11.2% return. International markets moved higher, as well, with the Global Dow Index returning 7.6%.

While we are about 10% off all-time highs, we do believe that a return to market highs is possible at some point during the year. Positive news from the Fed, progress on China-US trade talks, and the realization that the chances of recession in 2019 are low could be the catalyst. However we do see volatility potentially being more prevalent in 2019. History shows that the market generally follows January’s direction through the remainder of the year. Since 1950, a gain in January has preceded an annual gain 87% of the time.

As we enter February, we are optimistic that Fed Chairman Jerome Powell’s recent hinting that the Fed will take a more wait-and-see approach on rates will serve as a tail-wind to quell volatility in February. However, we are closely eyeing border security negotiations and China trade talks as potential sources of turbulence for the markets. This month marks a deadline on both fronts. Without a deal on border security before February 15th, the government will likely shutdown again and, without progress on China trade talks, the US-China tariff truce will expire at the end of the month.

Click here to read more!

Tags:

Financial Principles, LLC is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.