Compass Commentary – June 2019

Robert C. KleiberCommentaryLeave a Comment

Summer is near and the economy continues growth

Overall, the economy is the best it has been in generations. Consumers and business remain optimistic and the US economy continues to expand.  As of today the S&P 500 is up 14% in 2019.  The unemployment rate is 3.6%, the lowest in 50 years (1969). The Gross Domestic Product (GDP), a measurement of the nation’s economic activity, grew by 3.2% in the first quarter of 2019.  Mortgage rates are still relatively low at 4% for 30 years.  Middle income taxes have declined due to the increase of the standard deduction (income deduction of $12,200 for a single filer and $24,400 for a married couple).  Companies have repatriated approximately $800 billion from overseas due to a onetime tax rate decline from 35% to 15.5% which circulates in our economy.  Corporate balance sheets are strong.

Tariffs creating uncertainty

The stock markets rallied during the first four months of 2019 until May when the US/China tariff negotiations appeared to turn negative.  Then tariffs against Mexico accentuated the negative stock market.  And since, the US and Mexico have agreed on tariff negotiations, and for now, the stock rally is back.  The US and China meet later this month at the G7 meeting and hopes for a settlement continue.  This uncertainty has delayed some corporate expansion decisions until certainty reappears. Even a token settlement between US and China would provide positives for both sides.

Lots of noise not to worry about

While media and headlines dramatize for viewers, the bottom line is most of it is just noise.  As mentioned, companies are doing well and the overall economy is the best it has been in generations.  Interest rates are still low and consumers are spending.  More noise will be the standard in the political election season with both sides trying to score points.  A diversified portfolio of stocks, bonds and money markets over a long period of time will grow and reduce the potential of massive portfolio volatility during wide swings in the stock markets. 

We continue to research

As spring turns to summer, please let me know if you would like to review your portfolio strategy and personal objectives.  Thank you as always for entrusting us with the management of your finances.

You may reach me at any time on my cell 908-285-5876, send me a text or email me at rkleiber@compassfmllc.com, or call the office number below.

Sincerely,

Robert C. Kleiber, CFP®

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