Pilot Butte and the S&P 500

A Unique Market Perspective

At the recent all-time highs, the current bull market in U.S. stocks is the longest ever for the S&P 500 Index as the S&P 500 is up over 300 percent since it’s low in March of 2009. The markets were undulating like a yo-yo in October after reaching record highs in September causing some investors to naturally feel uneasy as the markets retreated almost ten percent as of November 1, 2018. As always there are many moving parts to the economy which lead to the bull market we have been experiencing as well as the bear markets that are a natural and healthy part of the markets. Even as the current U.S. economic expansion continues to lengthen, investors seem to be expecting signs of slowing momentum.

Last week I had an opportunity to meet leading U.S. Economist Ed Yardeni who used the analogy of his grandfather driving his car with a foot on the accelerator and the brake at the same time. The accelerator to the economy has been the U.S. stock market’s robust performance, inflation hovering around two percent and a record low unemployment rate. The likely brake on the economy is the Fed’s less friendly monetary policy with interest rate hikes and a very strong U.S. Dollar that hurts exports. Here are just a few of the schizophrenic workings over the past quarter.

• The Fed Funds increase in September was the eighth in this cycle as the Fed is gradually shrinking its bloated $4 trillion balance sheet. Could the recent rise in interest rates be an indication of doom for the economy and financial markets? I have read or listened to many prognosticators making the case that we are on our way to a recession. Fed Chair Jay Powell has clearly stated the

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