The Super Bowl is this weekend which means we have officially closed out the first month of 2019. We take this opportunity to play Monday morning quarterback, recapping the highs and lows of January. In sharp contrast to how last year ended, all the major asset classes we follow are up. Investors who held tight during the 2018 correction are now enjoying the rewards of their patience. Driving sentiment is a robust corporate earnings season which is about halfway over. Two-thirds of companies have surprised to the upside, with 15% growth reported.
Headlines this Week (Jan 28 – Feb 1, 2019)
- The S&P 500 is up over 8% for the month, a nice recovery from the 9% drop in December.
- Bonds are also putting up points on the scoreboard in January with near 1% return from kick-off.
- For those preferring fútbol to football, Emerging Markets is coming on strong, up 10%.
- However, the glaring weakness in the offense is turnover-prone India, which still needs to prove it can recover from recent fumbles.
- The MVP award for January goes to Small Cap stocks, up 13%.
The Week Ahead
- Notable earnings reports from Alphabet (GOOG), Disney (DIS), and Expedia (EXPE)
- 2/5: State of the Union address (“the state of the union is…”)
- 2/5: Chinese New Year (Year of the Pig… a symbol of wealth)
- 2/7: UK interest rate decision (no hike expected)
Spotlight: Why to root for the Rams
It is that time of year again when we update the “Super Bowl Stock Market Indicator.” As legend has it, if the NFC (or original NFL team) wins the Super Bowl, then the stock market will be up. Our data shows that the average total returns of the S&P 500 in a year the NFC/NFL wins is 15.4% versus 1.8% if they lose. Admittedly, the indicator does not have a great track record in recent years. In 2017, the Patriots (AFC) won yet the market was up 22%. In 2018, the Eagles won (NFC), yet the market was down 4%. However, the last time the Patriots and Rams met in the Super Bowl (2002), the Patriots won, and the market fell 22% as the Tech bubble burst. Superstitious investors should adorn their horns and join the mob squad. Go Rams!
Stock Highlights from Max
Contributed by Max Berkovich
In an earnings release packed week, it was the Banks that failed to garner much interest, mostly thanks to what is expected to be a longer low interest rate regime from the Federal Reserve. Because of the banks, the Financial sector was the laggard. The leading sector was Materials. On the earnings front…
- Facebook (FB) reported a consensus topping quarter. Investors hit the like button on the 30% year-over-year revenue growth. 93% of the $16.9 Billion in revenue came from mobile. Daily average users and monthly active users were up 9% in December from the year-ago period. The company claims that 2.7 Billion users use a Facebook product (Facebook, Instagram, WhatsApp or Messenger) and 2 Billion do it daily. The company ended the new quarter sitting on a cash pile of $41.1 Billion. For the record, the market cap of rival Snapchat (SNAP) is only $8.8 Billion. The company is not in the clear. There are still significant regulatory headwinds, but the advertising revenue gains made in the last quarter can sooth some of that.
- A similar earnings surprise was nowhere to be found for fellow communications sector holdings AT&T Inc. (T) and Verizon Inc. (VZ). Both companies missed expectations and failed to inspire investors with guidance. We look to The Walt Disney Co. (DIS) and Alphabet, Inc.’s (GOOG, GOOGL) earnings next week for further color on the sector.
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets over $1 billion.Overview
Strategic Financial Services, Inc. is a SEC-registered investment advisor. The term “registered” does not imply a certain level of skill or training. “Registered” means the company has filed the necessary documentation to maintain registration as an investment advisor with the Securities and Exchange Commission.
The information contained on this site is for informational purposes and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Every client situation is different. Strategic manages customized portfolios that seek to properly reflect the particular risk and return objectives of each individual client. The discussion of any investments is for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments identified and described do not represent all of the investments purchased or sold for client accounts. Any representative investments discussed were selected based on a number of factors including recent company news or earnings release. The reader should not assume that an investment identified was or will be profitable. All investments contain risk and may lose value. There is no assurance that any investments identified will remain in client accounts at the time you receive this document.
Some of the material presented is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Strategic Financial Services believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
No content on this website is intended to provide tax or legal advice. You are advised to seek advice on these matters from separately retained professionals.
All index returns, unless otherwise noted, are presented as price returns and have been obtained from Bloomberg. Indices are unmanaged and cannot be purchased directly by investors.
Advisory Services offered through Strategic Financial Services, Inc. Strategic Financial Services, Inc. and Cadaret, Grant & Co., Inc. are not affiliated.