Green Grass and High Tides - May 3, 2019

On April 23, the S&P 500 Index3 finished the day at 2,933.68, eclipsing its prior all-time closing high of 2,930.75. That was achieved on September 20, 2018 (St. Louis Federal Reserve).

We’ve experienced an impressive turnaround from the gloomy sentiment that pervaded the market late last year. It also marks an official milestone for the long-running bull market that began in March 2009.

Officially, the bull market, as measured by the S&P 500 Index, has extended its run past 10 years. Lengthwise, but not performance, it exceeds the 1990s (Figure 1). Note – bull markets come to an end when the index declines by 20% or more from a prior high. The three-month selloff in late 2018 came up just shy of 20% – down 17.77%.

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Aces High - May 1, 2019

The S&P 500 Index1 eclipsed its September 2018 high last week and added to gains early in the week (WSJ); it’s up over 17% since year end. The NASDAQ Composite3 also entered new territory.

Reasons for the sharp rally include—

  • We bounced from oversold conditions.
  • Recession fears have faded.
  • The global economy appears to be stabilizing.
  • The Fed’s on hold, and interest rates are low.
  • Q1 profits are topping a low hurdle (Refinitiv).
  • Investors are optimistic that the ever-elusive trade deal with China will eventually be inked.

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Surprise – A Rebound in GDP - April 29, 2019

Gross Domestic Product (GDP), which is the largest measure of U.S. economic activity, unexpectedly rebounded in the first quarter of the year, according to preliminary data from the U.S. BEA. GDP expanded at a 3.2% annualized pace in Q1, up from Q4’s 2.2%. It easily surpassed the consensus estimate from Econoday of 2.3%.

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Q1 GDP is in View - April 24, 2019

The quarter began on a soft note. Though the economy isn’t firing on all cylinders, the first read on Q1 GDP (Gross Domestic Product) looks to be respectable.

Estimates vary ahead of Friday’s release—

  • Blue Chip consensus estimate suggests a 1.5% annualized pace.
  • Economists surveyed by FactSet estimate growth at 1.8%.
  • Econoday places the number at 2.2%.
  • The Atlanta Fed’s GDPNow Model projects 2.8%.

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Fill ‘er Up - April 22, 2019

Have you pulled into the gas station lately? If so, you’ve probably noticed the cost of filling up the gas tank has risen since January. The price of a gallon of regular gasoline averaged $2.84 in the U.S. as of April 18, according to GasBuddy. It’s up over 60 cents from the early January low.

As the graphic illustrates, prices fell dramatically late last year, and the recovery has been just as dramatic.

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