On Air with Altair: 4Q 2018 Market Review Video
Want to hear Altair’s analysis of the markets, but do not have the time to read all of Altair Insight? Watch our video summary of the report and you will be caught up on our market review in 3 minutes.
Markets had a terrible fourth quarter. Was that based on realistic concerns about the economy slowing down or was it an overreaction?
We believe it was mostly an overreaction to negative headlines. The global and U.S. economies are in fact slowing, but slower growth does not mean no growth and more importantly it doesn’t mean recession. Both the domestic and world economies continue to expand. In fact, one benefit of the market shakeup, was that it created some opportunities for investors. In particular, both U.S. small-cap stocks and emerging-market stocks are a couple of areas that now have more attractive valuations and where appropriate we plan to add to these categories.
A big concern coming into this year was the Federal Reserve’s continuing interest-rate hikes and whether they might jeopardize the economic expansion. Has that changed?
Yes it has changed – and mostly for the better for investors. The Fed raised rates four times last year and that was one factor that contributed to last year’s poor stock market performance. But Fed officials signaled an important pause in rate hikes at their recent January meeting. Now, markets were expecting the Fed to back off their original plans, but Fed officials went well beyond what the market was expecting and clearly articulated that they did not have any plans to raise rates any time soon. This pause in raising rates provides a more favorable backdrop for markets.
The U.S.-China trade war began last spring and has caused a lot of concerns around global growth. How is that impacting the economy now?
The tariffs stand-off is holding up a lot of things in the economy: Business spending, global trade and consumer confidence. Resolving the trade conflict would remove many of these restraints, and likely lift markets. We do believe the increasing incentives for both countries should lead to at least the framework of a deal in the months ahead. However, until that happens, we do expect more bouts of market volatility.
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