TELFPlus Investment commentary
Miles Capital, Investment Advisor
April 9, 2019
U.S. fundamentals continued to remain strong through the fourth quarter, but slowed slightly.
Gross Domestic Product (GDP) fourth quarter growth posted at 2.2 percent versus the third quarter 2018 growth of 3.4 percent. However, GDP growth for 2018 was 2.9 percent compared to 2.2 percent in 2017. Fourth quarter corporate earnings increased over 12 percent and sales growth was 6 percent. While this was a decrease from the previous three quarters, it is still high relative to historical levels. Unemployment remained low at 3.8 percent, and consumer spending - including home sales - remains intact.
The first quarter of 2019 also saw a more positive economic tone from the U.S. Federal Reserve (Fed). The Fed has raised rates nine times since December 2015 with four of these increases during 2018. While they had previously indicated a potential two rate increases for 2019, the Fed shifted to a more neutral stance on future interest rate hikes. They indicated they’ll be more patient in watching economic activity before deciding on their next rate move.
The financial markets rebounded in the first quarter from a strong drop in the last quarter of 2018. The S&P 500 rose over 13 percent for the quarter, but this was a theme across most markets. Oil rose over 32 percent, the strongest first quarter results since 2002. U.S. High Yield was up 7 percent, the best first quarter since 2003, and U.S. Investment grade credit rose 5 percent, the best first quarter since 1995.
While we believe continued positive results are likely in 2019, it is possible we could see more volatility. Ongoing challenges to the financial markets include the fear and reality of tariffs, worldwide growth uncertainties, inflation, and continued uncertainty around Brexit.
The views expressed herein are the current views of Miles Capital as the stated date and are provided for informational purposes only. They are believed to be correct, but accuracy and completeness cannot be guaranteed and should not be relied upon for legal or investment decision purposes. All expressions of opinion and predictions presented are subject to change wihtout notice. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any securit. Past performance is not a guarantee of future results.