Topsy Turvy Market

What a wonderful summer, filled with heat waves, long days, sunshine and so much fun. With just a little time left before we go back to our everyday lives in September, this will be a memorable summer break.

One of the things many of us would like to forget is the volatility of the market, especially the last decline. Some of our clients have questioned the news headlines and expressed concerns about the stock markets.

The strong upwardly heading stock market took a nosedive from the top to lower levels.

Reports of slower economies internationally, coupled with the projected problems associated with China tariffs, aided in the stock market weakness.

However in contrast to balmy headlines, Barron’s reported the end of the week of July 29 that consumer spending was reported to grow at a 2.9% annual rate in the latest quarter, up sharply from the first three months of the year. Many of you may be aware, consumer spending accounts for 70% of the United States economy. Domestic Final Sales grew at a 3.5% pace last quarter more than double the 1.6% rate of first quarter 2019.

Also, reporting an average of the first two quarters shows first half Gross Domestic Product (GDP) growing at an above average potential 2.6% and perhaps might even make the Federal Reserve’s forecast look too low.

Despite doom and gloom headlines, the statistics show strengths in a variety of different industries, unemployment being at the lowest point in decades, coupled with rising wages, and in my opinion, our economy seems quite solid and growing consistently.

I have spoken with a lot of business owners in various parts of the United States, all reporting great sales, business growth, and a desire to expand and hire more employees at higher wages. Leisure and business travel are at high levels, and for most Americans, a feeling of economic confidence is positive.

Our Woloshin Investment Management (WIM) Portfolios, managed by our Portfolio Manager, Suzy Egan, are invested with objectives being professionally managed utilizing high quality dividend paying securities, and diversified in a number of asset classes, offering potential solid returns with less market volatility and risk.

Current interest rates are incredibly low. However, when compared to interest rates abroad, US rates are high. This along with the US being a safe-haven for global investors there is an influx of international money investing in US Treasuries. This has created a strong demand for US short, intermediate and long-term Treasuries, causing prices to rise and interest rates to decline in these securities. Thus the so called “inverted yield curve.”

Many financial experts are speculating, because of the low rate phenomena mentioned above, prognostications projecting an upcoming recession. A recession is defined by two consecutive quarters of lower GDP.

In my experience, when you have a pretty strong and growing economy with extremely low interest rates, coupled with historic low unemployment, rising wages, a decent real estate market, and construction projects booming all across America, a potential recession in the next 12-18 months would be unlikely.

As the summer comes to a close and we all go back to our regular lives, workers will return to work, business people will go back to their businesses, our children and grandchildren will return to school. Similarly the stock market along with our economy should get back to
growing and gaining value.

From all of us at Woloshin Investment Management, we thank you for the confidence you have given us and we respectfully appreciate your business.

We Are Here For You!

Warmest Regards,

Your friends at Woloshin Investment Management