The latest Bank of America / Merrill Lynch survey of institutional investment managers showed incredibly high allocations to cash. To us, this is a positive contrary indicator.
“Just released 1st quarter Gross Domestic Product was +3.2%. With almost 60% of the S&P 500 having already reported 1st quarter earnings, over 70% have beaten expectations, with the average beat at 7.5%. Our expectation: full year 2019 GDP will be close to +3%, with nominal GDP at +4.5% to +5.5%.”
2018 began with a roar and ended with a Federal Reserve Chairman’s thud. With a strong economy, the stock market was clicking along nicely until Fed Chairman Jerome Powell, during an October 3rd interview, said the Fed was a long way from “neutral” interest rates. In fact, he alluded to the possibility that the Fed might raise rates until they are “restrictive” to economic growth.