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The Markets This Week

February 19, 2019 | Weekly Commentary

by Connor Darrell CFA, Assistant Vice President – Head of Investments
U.S. stocks posted positive returns for the eighth straight week despite unexpectedly disappointing retail sales data. Stocks were primarily supported by optimism that the U.S. and China might make progress on a trade agreement before U.S.-imposed tariffs are set to more than double on March 1. Bond yields jumped higher to start the week but reversed course following the weak retail sales data released on Thursday. Bonds ended the week relatively flat as a result.

Starting Point Matters
We have consistently warned of the potential perils of attempting to time the market, and the past few months have only served to lend further credence to those warnings. But that doesn’t mean that investors should not consider point-in-time analyses when evaluating their long-term strategy. Following the tumultuous end to 2018, markets have rebounded considerably, and risks now look evenly balanced. We continue to believe that while recent economic data has sent mixed signals to investors, the probability of a U.S. recession in the near-term remains low. However, the reality is that we find ourselves in what is very likely to be the latter stages of the economic cycle, and this fact carries long-term implications for investors. Given the stage of the cycle in which we currently find ourselves, investors need to be aware that the long-term expected returns across asset classes look quite a bit lower than they did in the past. The successful implementation of an investment plan is a dynamic process that responds to the market environment. As such, in an environment where market returns will be lower, investors may need to consider saving more or spending less in order to stay on track.