With the markets moving higher (the US equity markets that is), let’s take a look at how the market is moving.
The big winner of the week is the Russell 2000 (small cap stocks) (all charts show the prior 1-month period).
The S&P 500 climbing above 6000 for the first time this morning.
A breakout for the Equal-Weighted S&P 500.
The International markets have been basically flat since the election.
And the big winner so far has been Bitcoin.
The FED has cut rates again, cutting short-term rates to 4.5% from 4.75%, with a 65% chance right now of another 25-basis point cut in December.
This is the seventh election I have been involved with in the financial services industry. Jeff has been involved with many more. The bottom line is we work for you to preserve and grow your wealth, no matter who the new president is…and there have been five different presidents during my time, with more to come, I’m sure.
The interesting thing is a key input to our model is close to turning negative, which, if it transpires, means we shift the portfolio to a more defensive posture, all the while remaining invested for the long-term. It turns roughly every 7-8 months and historically has given us about an 80% chance of being right. You can see from the chart below that it has been an up and down period from the start of COVID until now, as far as this input is concerned. Is this the time that something negative happens? Time will tell.
It’s possible that we get a whipsaw like we saw in 2021 or a solid downtrend. We just won’t know until it shows itself.
The well-regarded Professor Siegel of the Wharton School is on the side of the market moving higher, but also the 10-year treasury being around 5%. Those 2 things seem incongruent to me. See his CNBC interview here.
How about this for positive? Ed Yadeni, who is much smarter than we are, has said that the S&P 500 would be at 10,000 by the end of the decade.
The market being at 10,000 and the model saying there are short-term issues? Those aren’t incongruent, as we all know markets gyrate as they trend upward long-term. As such, we will continue to watch things very carefully.
Until then, have a wonderful week. If you have any questions, please reach out and we will be happy to have a conversation.