Robert Luna, Surevest CEO & Chief Investment Strategist, and Breanne Polonia, Wealth Advisor & Women’s Wealth Transition Specialist, hosted a private event in San Diego to discuss the latest economic and market news.
Over the last 8 weeks, the market has been fixated on the China and U.S. tariffs talk, the new tone the Federal Reserve has taken, and Q4 2018 earnings season. With so much going on in the markets, investors wanted to know Robert and Breanne’s insights.
On the China and U.S. tariffs discussion, Robert believes there will not be a resolution before the March 1st deadline, “It is unlikely that a final agreement will happen prior to the upcoming deadline—even though things are moving along in the right direction, there is still much more to accomplish.” He continued, “That being said, it is likely that an agreement to extend the deadline 60-90 days will happen.” He went on to say that he and his investment team are monitoring the latest news on this topic because he expects this to be a market mover in the short run.
Moving on to the Federal Reserve, Robert highlighted the two opposing views the market and the Fed have had over the last 12 months. “Last year the Fed had stated that the neutral short-term rate was close to 3.75-4.00 percent. However, the market disagreed.” He continued, “the market was very strong that the Fed would change its tone, and in fact, they have.” Robert concluded with, “The Fed’s Brainard and Bullard seemingly get more dovish by the day.”
On the earnings front, Robert said, “450 of 500 S&P companies have reported. 71% have beat bottom line and 59% have beat top line. Industrials are leading with 87% beat on the bottom line.” As the earnings season is coming to an end, the markets are now beginning to pay attention to macro news, like the upcoming Q4 2018 U.S. real GDP numbers that will be released next week. This data point was delayed because of the government shutdown but will be very important because it will provide some insights if the growth in the U.S. is slowing due to the trade dispute.
Breanne conveyed that, at Surevest, the focus is on the cash flow needs that are unique to each investor and not the short-term fluctuation of the markets. That is why it is important to build a sound financial and investment plan that considers the timing and amounts that are needed from the portfolio. A sound financial and investment plan diminishes the chances of having to liquidate holdings in a down market, which studies have shown to be unfavorable to the long-term outcome of an investor.