In 2019, Bad News Is Good And Good News Is…Also Good News


Here are some facts:

    • At 121 months, we are currently in the midst of the longest period of economic expansion in U.S. history.
    • The U.S. yield curve has remained inverted for over a month, a conventional indicator of an oncoming recession.
    • A rate cut at the end of the month is all but guaranteed, as Fed Chair Jerome Powell has repeatedly cited inflation and slowing global growth as concerns.

And yet….

The S&P 500, NASDAQ 100, and Dow Jones Industrial Average are all at record highs.

Historically, this wouldn’t make much sense. Why would the market react positively to a rate cut? And despite the ongoing trade tension with China, does it make sense that, according to Lipper Alpha, ETFs and mutual funds took in more than $260 billion in new money during the first two quarters of 2019?

Of course not. But in 2019 all news is good news, even when it isn’t.

The unfortunate reality of economic data is it’s next to impossible to truly paint a complete picture. Unemployment is hovering around 50-year lows—that’s good. But consumer confidence is at its lowest level since September 2017 and dropping—that’s obviously not.

Both bulls and bears have their ammo and are not afraid to use it. The bulls will say today looks like 2012, with rising markets and interest rates primed to go lower. The bears will argue this looks like 2007, with the market at all-time highs and some shaky underlying economic data. A flip-flopping Fed probably hasn’t helped matters as well.

So where does this leave us as we head barreling towards earnings season? Corporate earnings declined year-over-year in the first quarter, and as FactSet noted, expectations are lower for the second quarter.

“For Q2 2019, the estimated earnings decline for the S&P 500 is -2.6%,” Senior Earnings Analyst John Butters wrote in a note. “If -2.6% is the actual decline for the quarter, it will mark the first time the index has reported two straight quarters of year-over-year declines in earnings since Q1 2016 and Q2 2016.”

The upshot: keep your eye on the horizon when it comes to long-term investing but be flexible in the short-term: things may or may not get bumpy.

Active Trading with Lightspeed

Lightspeed provides active traders with all the tools required to help them find success in stock trading, and we have been developing and honing our active trader platform to offer the best possible user experience in the marketplace. With the intuitive interface layouts and institutional quality stock and options scanners, we aim to help traders reach their goals, no matter what their strategy is. We also offer our clients some of the lowest trading fees in the industry.

For more information on a professional trading platform with Lightspeed, please call us at 1-888-577-3123, request a demo or to open an account.

Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services provided by any of the above service providers and any service used to execute any trading strategies are solely based on the independent analysis of the user.

You may also be interested in...

The IPOX® Week, October 21, 2019
Read More
Partial Trade Deal, Partial Optimism
Read More
The IPOX® Week, October 14, 2019
Read More
What’s The Deal With These Expensive Restaurant Stocks?
Read More

Try the demo

Compare Platforms
Check the background of this firm on FINRA's BrokerCheck

Our website uses cookies to improve the performance of our site, to analyze the traffic to our site, and to personalize your experience of the site. You can control cookies through your browser settings. Please find more information on the cookies used on our site in our Privacy Policy. By clicking OK, you agree to allow us to collect information through cookies.

OK