February 2019 Financial Markets Summary

Wow, what a difference a month can make! The 4th quarter ended on a sour note with domestic stocks down by -14% to -21% and international by -7% to -13%.  To put this into historical perspective, the S&P 500 has experienced 16 quarters of double digit losses dating back to 1968.  On average, these generated about a -15% loss, which is in line with 2018’s 4th quarter correction.  However, the market has historically bounced back by an average of 7.6% in the quarter following the correction.

We just didn’t expect to get all of this average return back in January.  Practically all markets around the world raced higher with the S&P 500 posting its strongest January in 30 years.  The primary driver of this performance seems to come down to a change in the Federal Reserve’s interest rate policy.  Many were concerned that the Federal Reserve would continue hiking interest rates, ultimately increasing borrowing costs and curtailing corporate profits.  However, the Federal Reserve’s updated stance to pause further rate increases has helped ease some of these concerns.

Increased consumer spending from the holiday season also helped drive markets higher. According to the National Retail Federation, the average consumer planned to spend $1,007 on items such as decorations, candy and gifts last holiday season.

Speaking of spending, let’s take a look at the estimated expenditures for this weekend’s famed Super Bowl.  30-second commercial slots are estimated to cost $5.25 million each.  As you know, this game will not be cut short of any commercial time accumulating for a total of almost $500 million spent on pre-game, in-game and post-game advertising!  In addition, retailers are expected to generate about $14.8 billion in sales around the game with the majority being spent on food and drinks.  This equates to about $81.30 per person watching the game.  And then for those lucky enough to attend the game in Atlanta, tickets are ranging from $4,000 to $6,000 each!

This is a reminder of the great Yogi Berra’s quote, “A nickel ain’t worth a dime anymore.”

Asset Index Category Category Category 5-Year 10-Year
3 Months 2019 YTD Average Average
S&P 500 Index – Large Companies -0.3% 7.8% 8.7% 12.6%
S&P 400 Index – Mid-Size Companies 0.6% 10.4% 6.9% 13.9%
Russell 2000 Index – Small Companies -0.8% 11.2% 5.8% 13.0%
MSCI ACWI – Global (U.S. & Intl. Stocks) 1.7% 8.1% 6.6% 11.6%
MSCI EAFE Index – Developed Intl. 1.3% 6.6% 2.7% 8.1%
MSCI EM Index – Emerging Markets 10.2% 8.8% 4.8% 9.6%
Short-Term Corporate Bonds 1.2% 0.7% 1.3% 2.7%
Multi-Sector Bonds 3.5% 1.0% 2.4% 3.7%
International Government Bonds  4.8% 1.8% 0.5% 2.1%
Bloomberg Commodity Index -2.4% 5.5% -7.9% -2.7%
Dow Jones U.S. Real Estate 7.7% 11.4% 9.6% 15.4%


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