Happy New Year! Now that we have got that out of the way, welcome to the real start of 2019 and the first News, Views and Truths of the year.
And what a cracking start. In the words of my colleague, Mr Martin Howe, “Welcome to BoomTown”.
Now, I’d like to start with a clear message that there is no specific and demonstrative statistical definition of “BoomTown”. However, since 27th December, the FTSE 100 is up 5.64% and up 0.36% at the time of writing. And moving to the US, the picture is even better; since Christmas Eve the S&P 500 is up 10%.
When stocks bounce 10% off the lows and you hit the club with your boys pic.twitter.com/V7OcHGQaU8
— Young FinTwit ? (@scheplick) January 11, 2019
(The clip above is Bill Gates and the Microsoft board at the Windows 95 Launch in 1995, it has nothing to do with the stock market but it will make you chuckle! #DadDancing)
And if you read last week’s “pre-blog” here, you might have some idea as to why this has occurred. The market has reacted to the “long pause” in US interest rate hikes with abundant glee. Furthermore, it could be suggested that the data-dependent Fed will read this as a job well done, patting themselves on their collective backs and enjoying the warm fuzzy feeling we all get when things go how we want them to.
So, 2019 to be a belter then? Hold on cowboy, let’s not get ahead of ourselves.
It has been absolutely confirmed that global growth is in a slowdown from the previous year’s rocketing numbers. However, that is only a small part of the story…
Inflation is absolutely locked down under control. This, combined with static interest rates, counter the argument of a global recession. That’s the big one and it’s not on the horizon.
Again, the US is in rude health – simply a lot cheaper than three months ago (but not two weeks ago #timeinthemarket people!). Emerging Markets were a screaming buy, now an apoplectic hollering buy. I have just enjoyed a catch-up meeting with an Emerging Market specialist from JPMorgan who states that, based upon current market levels, Emerging Market indices are priced to return 15%pa over the next 5 years.
Although this is in no way guaranteed and although these economies are cheap, they absolutely suffer from geopolitical and liquidity headwinds which can create significant levels of market falls. Nevertheless, recent falls combined with strong economic fundamentals present very compelling investment opportunities over the longer term.
And that’s despite Brexit. And I’m not talking about that… today!
So, a great start to the year, let’s keep this positivity going!
And to conclude, as per every other blog, a playlist; this week supplied by the aforementioned Mr Howe. Have a great weekend and I expect to see you all next week, smiling and living the dream.