On Air with Altair: 1Q 2019 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.
Federal Reserve’s Pivot
One of our key points this quarter is the Federal Reserve’s pivot. A less hawkish Fed has been a major catalyst for markets. Its decision to suspend interest-rate hikes and halt balance-sheet reductions shows it’s willing to do whatever is necessary to keep this economic expansion on track. We think this provides an important underpinning for markets for the rest of the year.
Healthy U.S. Economy
A second topic addressed in our commentary is the overall health of the U.S. economy. The economy endured a soft patch to start the year but has since shown its resilience, as we’ve seen with 3.2% GDP growth for the first quarter. Manufacturing growth has slowed, and the streak of seven straight quarters of corporate earnings growth is in jeopardy. But the risk of a recession in the next year appears low given accommodative central banks, a strong job market and several positive leading indicators.
Trade War Optimism
Next, our commentary reviews the state of the U.S.-China trade war. The tariffs have disrupted many global supply chains and curtailed business spending. Progress toward an agreement is encouraging. An eventual deal will not resolve all trade tensions. But we expect it would revive global trade and perhaps weaken the dollar. That should provide tailwinds for international developed and emerging-market stocks and further ease pressure on global markets.
Finally, stocks’ sharp climb so far this year obviously raises the question of whether a pullback is likely. Although markets have been very volatile over the last year, stocks’ recent performance has not been all that abnormal if viewed in longer-term context. The S&P 500 is up 11% in the past year, but only flat since September of last year. We see no fundamental catalyst for a near-term bear market. We believe this year’s gains are sustainable.
Past performance is not indicative of future performance, and all investments are subject to the risk of loss. This material is for informational purposes only and should not be construed as an offer to sell or buy any security. Material contained in this communication should not be construed as accounting, legal, or tax advice. We encourage you to contact us with questions regarding the material shown.