Apparently, stocks can also fall in 2019.
In case you needed evidence, the S&P 500 SPX, +0.97% , Dow DJIA, +0.30% and Nasdaq COMP, +1.44% proved that last week with all three in the red for five days in a row, which hasn’t happened since 2016.
So much for that big bounce off December lows?
Of course, nobody — well, with a few bearish, and increasingly desperate, exceptions — is really pushing the panic button just yet. The market has proven to be far too resilient to be thrown off by a few down days.
But Michael Wilson, Morgan Stanley’s top U.S. equities strategist, believes investors might be buying into the Goldilocks narrative: Economy’s not too hot, and it’s not too cold. Hello new highs for stocks and tighter spreads for credit.
Not so fast.
“What if growth isn’t ‘just right’ and Goldilocks is the wrong fairy tale?” he wrote in a note to clients. “I see other reasons for the growth slowdown that have been underappreciated by most market analysts.”
Among them, he pointed to corporate capex and buybacks getting a significant boost from the tax cuts and repatriation of overseas cash — one-time boosts. Also, Wilson said higher labor costs and logistics are “definitely starting to bite.”
Then, of course, there’s Friday’s disappointing jobs report, which registered the smallest gain in new jobs since September 2017.
“Rather than Goldilocks,” Wilson explained in our call of the day, “perhaps we should be talking about Hansel and Gretel — a fairy tale about the dangers of an unwholesome appetite as a means of survival — i.e., chasing prices higher and justifying it with the wrong narrative.”
Not much in the way of rising prices to chase higher this morning, with the Dow having trouble getting any momentum largely due to