This current Bull Market is officially the second longest in US history. It is now 2,608 days old since its March, 2009 birth. That eclipsed the Bull rally from 1949 to 1956 which bridged the terms of Harry S Truman and Dwight D. Eisenhower. Only the dot-com bubble of the 1990’s lasted longer, a staggering 3,452 days; nearly 10 years! The current Bull remains the most hated and distrusted Bull Market in history, the complete opposite of the dot-com days. We still think the Bull is alive and well. We are just prepared for a continuation of the correction.
There was a great deal of Market turbulence this week. Much of it has come from central banks, namely the Bank of Japan, the People’s Bank of China and our Fed. Earnings have played a big role too, and it’s been a mixed bag. With a Stock Market that was already overbought and feeling heavy, it is only natural that a consolidation would come. Stocks don’t go up forever. Interestingly, the Dollar continues to stay weak, despite all of the serious issues overseas. It’s certainly been a source of frustrations for the Japanese and Europeans. It’s been great for US exporters, commodity producers and investors. Crude prices keep climbing, with West Texas Intermediate at $46 now. Boy is that a big move from the February lows of $26 oil.
The US economy grew just 0.5% in Q1, the slowest rate in 2 years. Consumer spending was soft and exports were hurt from weak demand overseas. The Dollar has been a mixed ingredient. The Street was looking for 0.7% growth, which was still slower than the 1.4% growth reported in Q4 2015. The first half of the year was expected to experience slow growth, but the second half is still expected to ramp considerably. 2%+ growth for the full year is still very doable for the US economy.
This week the Fed gave some signs that it is closer to a rate hike in June than investors might have thought. They did keep rates unchanged at the April meeting, which surprised nobody. There were some tweaks with some of their language regarding the outlook. The Fed acknowledged the improvement in the markets, but are still cautious with some international issues. The Market is pricing in less than a 30% chance of the next rate hike in July, but a 60% chance that rates are higher in December. The Dollar is not moving higher on the news, which is interesting. We think that changes, and anticipate a higher Dollar this Summer.
We’re all over it. Enjoy the beautiful weather this weekend. We’ll be back, dark and early on Monday.
Mike
