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When Will This Market Turn?
Readers of this Market Digest will recognize that we've been talking about market highs and rich valuations for some time now. The S&P 500 is now up 265% since its low on March 9, 2009. These lofty levels come at a time when expectations for market-friendly legislation are uncertain and the threat of military conflict or a geopolitical crisis is growing.
However, neither longevity nor high stock prices, nor political turmoil are usually enough to send stocks into a protracted slide. The culprit in nearly every case is recession.
Markets tumble all the time, but have a way of coming back, as long as the economy continues to grow.
But when a drop is accompanied by a recession, it spells trouble. It was economic slowdowns that made the Great Recession and the dot.com bust so painful. And it's safe to assume that when this market's rally does finally end, it will be a sharp economic downturn that causes the real trouble.
So what will lead to the next recession? Here are seven potential catalysts we're keeping our eyes on.
Protracted bear markets are generally not caused by short term earnings disappointments, political shenanigans or isolated global events. So we recommend that you take the daily news with a grain of salt. However, bear markets do occur, so make sure your exposure to stocks is appropriate given your time horizon, income needs and risk tolerance. If you'd like a review of your overall asset allocation and your risk exposures, please give us a call.
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Amid volatility, US stocks posted a second straight week of gains led by tech giants Facebook, Amazon, Netflix and Alphabet. Futures markets were down sharply after news of North Korea's ballistic missile launch over Japan and energy stocks were hit hard as investors gained a clearer picture of hurricane Harvey's devastation. However, equities showed resiliency after a restrained US response to North Korea and a bi-partisan willingness to provide relief to the Texas gulf coast. Some positive economic news also helped.
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> Employment:
August payroll growth, though solid, missed expectations while wage data clearly disappointed. Nonfarm payrolls rose 156,000 in the month and revisions were negative with both July and June revised down 20,000 and 21,000 respectively. The unemployment rate reflects the softness, rising 1 tenth to 4.4%.
Details in the report were stronger, however. Private industry employment, which may be a better indicator of underlying labor market conditions, was stronger, helped by broad-based gains in manufacturing and construction employment.
> September Preview:
September has several important events that markets will be watching closely, which may increase the chances of overall market volatility. Interest rate decisions from the Federal Reserve, Bank of Japan, and European Central Bank are all on tap this month. And, congress has to raise the debt ceiling and pass a budget or risk a potential government shutdown.
- September 7: European Central Bank meeting
- September 19: Start of the Federal Open Market Committee Meeting
- September 20-21: Bank of Japan Meeting
- September 29: US Debt Ceiling expires
- September 30: US Government Fiscal Year-end
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STRATEGIC  DISCUSSIONS LUNCHEON, SEPTEMBER 26
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In our ongoing effort to bring you prominent thought leaders sharing insights on topics affecting the capital markets, we continue our
Strategic Discussions series this fall with:
Seeking Cover:
Current Geopolitical Events
and their Potential Impact on Elevated Market Valuations
Our featured speaker is James Hickey, US Army Colonel, Retired, a Senior Military Advisor to the Senate Armed Services Committee and Leader of Operation Red Dawn, the US military effort that captured Saddam Hussein near Tikrit, Iraq in 2003.
Mr. Hickey has a deep understanding of the international landscape, and extensive knowledge of current political and global security issues. His "boots on the ground" experience will offer real insights into the opportunities and pitfalls we face as a nation, and a methodology for evaluating global events.
Tuesday, September 26, 2017 from 12:00-1:30 pm in Costa Mesa, California.
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New Market Wealth Management offers modern investment solutions backed by extensive research and experience serving the needs of wealthy families. Through our strategic partnership with
Cliffwater LLC
, we have access to institutional-quality research, investment due diligence and asset allocation tools. We believe this level of experience and unique access to in-depth, sophisticated research are essential for success in today's complex world markets.
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