”The way to get started is to quit talking and begin doing” (Walt Disney)The 1st May already and as many countries around the world celebrate Labour Day, the markets continue to be something to celebrate also. With the exception of a small pull back in China, four positive months so far in 2019 as the bull market continues. Raw data being
MSCI World +2.8% +15.6%
S&P 500 +3.9% +17.5%
FTSE +2.8% +10.3%
Nikkei +5.0% +11.2%
SSE -0.4% +23.5%
MSCI EM +3.5% +16.6%
As for Forex, a very benign month in what is inherently a volatile sector , the US Dollar’s performance against other major currencies as follows:
GBP +/- 0% -2.3%
EUR +0.1% +2.3%
JPY +0.6% +1.8%
AUD +0.6% -0.2%
CNY +0.3% -2.4%
So what does that tell us about 2019, should we be locking in the gains for the “inevitable” correction as the Bears and Doomsayers will be telling you, or holding and enjoying continued growth as 2019 continues to grow from strength to strength from the glass half full brigade.
Of course no one knows the answer to this. All we can do is take a look at factors which may make impact. One thing I do know is that focusing on the very short term with stock markets is never worthwhile. They are volatile but to illustrate their durability, despite the worst December since The Great Depression and Q4, 2018 being one of the worst in history, the 12 month return on the S&P is still over 11%. Try finding that in the bank
If the S&P’s growth continues at the same pace for the remainder of 2019, then coincidently the annual return will exactly equal that of the market’s most successful year ever, 1954. That year, the return was 52.5%. Even the most ardent bulls are unlikely to tell you that we will equal or surpass the market’s 91 year record, of course possible but unlikely.
One indication of a strong economy is the levels of unemployment. With today being the day that worker’s rights are remembered, looking at the statistics on the current state of employment, it all reads very positively and is a factor in the excellent run the markets have had this year.
Whilst looking at the countries in the world with the lowest levels of unemployment, I was mildly amused to see that the four countries listed with the lowest percentage are Thailand, Cambodia, Laos and Guernsey! Being a Channel Islander (albeit from the far more sophisticated island of Jersey :-)) living in South East Asia made me wonder about the relevance.
Looking at more developed economies, the numbers read well. The UK, US, Germany & Japan with current unemployment rates of 3.9%, 3.8%, 3.2% and 2.5% respectively and all at decade lows.
In the US, the last three years have seen unemployment remain below 5% year on year for the first time since the turn of the century. To find the prior period where there was a similar three year run you have to go back to 1967
One of my earlier monthly reports talked about population growth and therefore consumer growth and therefore stock market / portfolio growth. Coca Cola will sell more cans of coke next month than they did last. Employment leads to increase in consumption.
It’s this demand by the consumer which has seen an increase in “Factory Cities” popping up for in places like Bangladesh and China
The largest of these “cities: employ 20,000 people. One of them, EUPA manufactures 25,000 Electrical appliances a day, not a week, a day. They only do so because there is a market to sell to ……..