Record Week On Wall Street
The major indices vaulted to fresh record highs last week after the Fed signaled it is ready to cut rates in July. The S&P 500 crossed above 3,000 for the first time ever and the Dow Jones Industrial Average topped 27,000. The Nasdaq composite also hit a fresh record high last week and -ladies and gentlemen, that is the power of easy money. Remember, for now, the easy money is front and center and everything else takes a back seat. That being said, the FLS portfolio navigated the latest pullback with grace and was buying when other people were selling. That is a winning formula because we are now every well positioned and we do not have to “chase” this rally. Knowing when to buy when others are fearful and selling is a very important skill that will set you ahead of the crowd. For now, the action remains strong and we are entering earnings season over the next few weeks. Until the market stops respecting easy money, or we see any substantial selling show up, the bulls deserve the benefit of the doubt.
Stocks fell on Monday as investors waited for a busy week of data to see what the Fed will do next. Fed Chair Jerome Powell is set to testify in front of the House Financial Services Committee on Wednesday. Stocks were quiet on Tuesday after China and the U.S. agreed to hold off on adding additional tariffs on each other’s goods and restart trade talks. Both sides are scheduled to resume negotiations soon. Stocks jumped on Wednesday after Powell all but said the Fed is ready to cut rates because of weakness overseas. That helped the S&P 500 jump above 3,000 for the first time ever.
Thursday & Friday Action:
On Thursday, the market rallied, helping the Dow jump above 27,000 for the first time ever. Shares of United Health, CVS Health and Cigna all jumped nicely after the White House dropped a proposal to eliminate drug rebates. Separately, shares of Delta Air Lines rose over 1% on better-than-expected earnings.
Market Outlook: Easy Money Is Back
Once again, global central banks showed up and juiced markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and more easy money from global central banks. Earlier this year, the Federal Reserve reversed its stance and moved back into the easy money camp. Then, other central banks followed suit and that means easy money is back to being front and center for the market. Separately, the trade talks have resumed with China and the markets are back to new highs. As always, keep your losses small and never argue with the tape.