Anything that portends to reduce uncertainty is always welcome.

The investment community – just like all the companies listed on all of the major exchanges – would rather have a modicum of bad news facts than cliff-hanging maybes.  The virtue of bad news is that it (usually) is something you can use to plan some strategy to overcome it, whereas uncertainty can leave you in limbo — having no plan at all.

Although the House’s impeachment of President Trump was always unlikely to end in removal, it’s still good to have the process over with — and with it that bit of uncertainty retired. Similarly, the recent flare-up with Iran has also (seemingly) settled down. The coronavirus remains unpredictable but apparently less so than a week ago. Although the virus itself continues to spread, both the reports of new cases and the death toll are rising more slowly. Ian Shepherdson, chief economist at Pantheon Economics in London said “The trend rate of increase is slowing.”

Meanwhile, China announced that it was reducing, by half, the tariffs on a whole bunch of stuff — worth about 75 Billion dollars annually. Like Trump’s acquittal, this was largely anticipated but also like the acquittal, it’s good to have it actually occur. Dallas Fed Chair Robert Kaplan said in a speech Thursday that he thinks the coronavirus will have a near-term impact on China’s economy and that we will see some ripple-effect globally. But he added that even with the virus issue and the continuing problems at Boeing, he still sees ‘solid’ U.S. growth of at least 2.25% for 2020.

Does (Can) Iowa Count? Holy Moly, what a debacle! Seems Mayor Pete has won the state. No, wait! Maybe it’s Bernie. On Monday night, the actual evening of the caucus, Amy Klobuchar took matters into her own hands, declared victory and got on a plane to New Hampshire. At least that was decisive. One thing does seem certain and that is that Joe Biden did not win Iowa. I see now that Democrat National Committee Chair, Tom Perez, has called for a full re-canvassing. Hopefully, they will leave the code-challenged mobile phone app aside. Maybe they can call Obama for help. If I recall correctly, he knows how to use a pen and a phone.

Ron’s Market Minute – Wet Blanket?

So, six days ago (the last of January) the big gorilla S&P500 index* was down on a year-to-date basis. It had just finished its worst weekly decline since the end of July. Also, seven of the twelve S&P sectors were down as of Jan. 31st. Now, four market days later the S&P500 is up 3.34% for this week.  If the gain holds through Friday’s market close it will be the largest weekly gain since early June – when the correction in May ended. And at the moment, 11 of the 12 sectors are now positive for the year.

It’s true that we can usually find reasons for the return pattern. Just look at the main story content today to find all kinds of reasons for ups and downs. 

Still, as I alluded to in the past several weeks, markets have felt a bit frothy. I say that because the ‘normal’ pattern that markets follow after a big run (like Q4 of 2019) is to do a bit of back-and-forth action and absorb those big gains from Q4. They tend to do that because they need a bit of time to digest the gains. That said, I’m as glad as anyone to see the sharp bounce-back, but my suspicions are that this particular chapter may not yet be over, and I wouldn’t be at all surprised to see some of that back-and-forth action before Ms. Market goes on to the next big upswing. The underlying fundamentals continue to be strong, and I also expect that the next major move will be to the upside. 

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw[@]denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

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