What Does the Future Hold for This Bull Market?
The middle of last week marked the longest bull market in history, while we saw some indications of a NAFTA Deal and more tariffs. Read on to get the details…
Do We Have a NAFTA Deal? There were some indications this week that the United States may be in the final stages of a revamped NAFTA agreement with Mexico, though Canada remains sidelined for the time being. From a political standpoint, both Mexico and the U.S. want a deal soon – Mexico wants an agreement before newly elected Lopez Obrador takes office, and the Trump administration is hoping for a deal before midterm elections. The key to this “handshake” deal is new rules on auto trade, which is designed to boost investment in the United States. Canada, on the other hand, has been left out of these negotiations perhaps as a tactic to put more pressure on the northern neighbor to offer concessions. A completely re-written and re-negotiated NAFTA is still seen as a long shot.1
Get the answers with our guide, “5 Investment Do’s and ‘Don’ts’”
The Longest Bull Market in History – By the middle of this last week, the S&P 500 had extended its bull run to 3,453 days, making it the longest bull market in U.S. history. While we agree that the S&P 500 is still in a bull market (we believe more gains are ahead), it is also worth noting that the S&P 500 has still not surpassed its January all-time high. In other words, no one can say with certainty that we’re even still in the bull market. The market must continue to reach new all-time highs for that to be the case. That being said, if the S&P 500 does continue to climb from here, as we believe it will, this bull market will surpass the previous record set in the 1990 – 2000 period. Investors probably reluctantly remember when this bull market started – the S&P 500 had fallen some 50% following the global financial crisis, and at that the bottom U.S. stocks accounted for 43% of global markets. Today, U.S. stocks make up nearly 54% of global markets.3
More China Tariffs Go into Effect – As we have pointed out in this column before, for all of the hundreds of billions of dollars of proposed tariffs, there have only been U.S. tariffs on $34 billion of Chinese goods so far. That number jumped to $50 billion this week, as tariffs on $16 billion worth of Chinese imports took effect on Thursday. As promised, the Chinese government responded in kind with levies on American goods worth the same amount, which brings to total tariffs on goods to $100 billion. Research suggests that this level of tariffs would reduce global trade by about 0.5%, but we wonder if the effect on consumption could be even bigger.4
Is China Feeling the Pressure? Reporting from China this week gave indication that China consumers are feeling the pressure of the trade war, and that an air of pessimism is starting to affect the populace. There have even been references to China encouraging a “consumption downgrade” culture, which is a 180-degree shift from “consumption upgrades” culture that existed over the last few years. China’s middle class of over 400 million has enjoyed strong economic growth and the ability to spend more on ‘luxury’ goods and even American brands like Nike and Starbucks. But today, the narrative is shifting – China’s economy is slowing, the stock market has been roiled in a bear, retail sales in 2018 have grown at their slowest pace in more than a decade, and wages in the private sector are growing at their slowest pace since 2008.
We can’t predict or control the outcomes of these news stories, but investors can stay focused on making sure their own actions help guide their investments to succeed. One way to do this is not to fall prey to common investing mistakes.
There are common mistakes and habits that can help some investors succeed while others fail. To help you understand some of these habits, we have created the guide, “5 Investment Do’s and Don’ts.”6
In this guide, we provide our thoughts on what we believe are 5 of the biggest financial mistakes investors should avoid, while also examining 5 financial habits that we think can help you invest successfully and with confidence. If you have $500,000 or more to invest and want to learn more, click on the link below:
2 ZIM may amend or rescind the “5 Investment Do’s and Don’ts” guide for any reason and at ZIM’s discretion.
3 The Wall Street Journal, August 22, 2018, https://www.wsj.com/articles/as-u-s-bull-market-powers-ahead-rest-of-world-is-left-behind-1534938880
4 CNN Politics, August 23, 2018, https://www.cnn.com/2018/08/23/politics/china-us-tariffs/index.html
5 The New York Times, August 22, 2018, https://www.nytimes.com/2018/08/22/business/china-consumer-downgrade.html
6 ZIM may amend or rescind the “5 Investment Do’s and Don’ts” guide for any reason and at ZIM’s discretion.
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