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“It’s clear that no matter what the Federal Reserve and Chairman Jerome Powell did and said at the final monetary policy meeting of the year, they couldn’t make stock investors happy. Despite the Fed doing what had been expected, which was boosting interest rates for the fourth time this year and cutting its 2019 forecast to two hikes from three, the S&P 500 went from being up as much as 1.54 percent to down as much 2.25 percent.
The Fed’s decision should have been good news for stocks, as any more of a dovish tilt would have raised concern that the Fed sees the economy deteriorating much faster than thought. East West Investment Management Co. market strategist Kevin Muir captured the zeitgeist in a blog post before the Fed’s statement when he wrote that “the market has talked itself into believing the Fed will err on being dovish, so the bar has been raised for Powell’s performance.” Perhaps, but the reality is that the equities market has been on a steady decline since early October and the path of least resistance, especially with the year rapidly coming to an end, is lower. What we know is that the stock market is poised to set its low for the year in December for only the sixth time in the past 91 years. When that happens, stocks are typically either in a long-term downtrend for a large part of the year or break violently lower in December, according to Bianco Research. This is significant because when this happened in the past, the following year was not a good one for equities. Recessions occurred in four of the five subsequent years and stock returns “were nothing short of a disaster,” according to Bianco, with losses averaging 18.4 percent. The lone exception to a recession was 1941, when the Pearl Harbor attack caused the market to drop to a new low that December. While 1942 did not experience a recession, stock returns suffered for the first half of the year before rebounding to end 12.4 percent higher.”
JJ Editor's Daily Picks
"The likely successor to British Prime Minister Theresa May, Boris Johnson, has plans to subsume the government department overseeing development aid into the foreign office, effectively eliminating it. That will destroy a post-Brexit United..."
"Gerard Baker, editor-at-large at the Wall Street Journal (no reflexively anti-Trump publication) recently wrote a piece decrying Donald Trump and his foreign policy as a fount of erratic unpredictability. This essay will give the counter view...."
"On Wednesday, Congresswoman Ilhan Omar announced that she will be visiting Israel and the Palestinian territories in the coming weeks. Omar will be accompanied by Rep. Rashida Tlaib. The two freshman congresswomen have become a focal point of..."
"Netflix may have lost US subscribers for the first time since it began making its own shows, but that didn't stop the streaming giant from dropping new figures about how many people are sucked into its Adam Sandler vortex. (Spoiler: More than..."
"A few years ago, Amy Balliett, CEO of a Seattle-based design and marketing firm, noticed that as the work week slogged on, her employees’ energy and productivity wilted. “That would slump to such an extent that the same task on Monday would..."
"Over the last few days the #faceappchallenge has taken over social media. This “challenge” involves downloading a selfie-editing tool called FaceApp and using one of its filters to digitally age your face. You then post the photo of your wizened..."
"Although there are plenty of irrational aspects to life in modern America, few rival the odd fixation on lawns. Fertilizing, mowing, watering — these are all-American activities that, on their face, seem reasonable enough. But to spend hundreds..."
"Can a book change the way we think? I don’t mean that in the sense of a reader’s opinion or ideology shifting—of course the right literary work can do that. But can a book rewire the brain itself, literally changing the way one particular mind..."
"It’s our job to let kids know we see and hear them, but we’re not necessarily going to solve siblings’ conflicts for them (or else they never get the practice). When squabbles start, imagine you’re a sportscaster and describe what you see in..."
"Magali Trejo-Martinez, a 22-year-old living in Salem, Oregon, recently went on a date that was rather uninspiring. “I had dinner, had a couple margaritas, and then went home,” is how she recapped the evening. This outcome wasn’t entirely..."
"The first lunar landing was many things — a D-Day-like feat of planning and logistics, a testament to the power of man's will, an ostensible propaganda coup for NATO. It was also, I think, one of the most misunderstood events in the history of..."
"THE FIRST TIME Bernie Sanders ran for president, he didn’t talk much about being Jewish. In fact, he didn’t talk much about himself at all. His 2016 primary campaign, like his whole political career, was relentlessly focused on one topic: income..."