Market News – Week of April 16th, 2018

SECOND LONGEST EXPANSION SO FAR: According to the National Bureau of Economic Research, we are currently in the second longest economic recovery in U.S. history (dating back to 1845). The longest was 120 months from March 1991 to March 2001. The current expansion has gone from June 2009 until today (April 2018) or 106 months. One of the reasons this expansion is so long is that housing did not contribute to the recovery for the first few years of the expansion, and the housing recovery was sluggish for awhile when it started.

…SO WHEN WILL IT END?: Recessions are very hard to forecast, and forecasters in general have a very poor record in predicting them. A big reason, of course, is incentives. Wall Street forecasters have an incentive to be optimistic. For media and bloggers, there is an incentive to be negative because bad news sells. I try to bring you tidbits of actual data in this email without a lot of predictions or forecasting, allowing you to draw your own conclusions. I will always tell you make sure you will be happy with your portfolio allocation no matter what the markets do in the next 12 months. Unless you are “all in” or “all out”, you will be disappointed by how much you didn’t get if the markets do better than you thought, and by how much you lost if the markets do worse than you thought. Don’t be all in or all out, but be content with diversification that makes your portfolio more boring than the overall markets.

BOUNCING STOCK MARKETS POST WEEKLY GAINS: Rebounding technology companies and rising energy stocks helped stock markets enjoy a week of gains. It did not hurt that a bunch of banks posted strong first quarter earnings reports. Solid corporate earnings are creating some sense of optimisim despite the triple concerns of shifting trade policy, the pace of inflation, and the potential for escalating armed conflicts in various parts of the world.

Weekly Market Performance

OIL PRICES RISING: According to the International Energy Agency, inventories of oil in advanced nations are at their lowest point since April 2015, an indication that demand is rising and that the January 2017 pact by OPEC, Russia and a few other countries to lower production is working. This coupled with increasing tensions in the Middle East are pushing oil prices up. Last week, oil prices rose to their highest level since late 2014.

THE END OF A COLLEGE: This publication has predicted that we will see more private colleges close their doors forever. I take no joy in being correct as Mount Ida College in Newton, Massachusetts recently announced that the May 2018 commencement will be its last. It just agreed to sell its campus to the University of Massachusetts. Students not graduating will have to finish their degrees elsewhere, and about 300 employees are being laid off.

References: 

SECOND LONGEST EXPANSION: http://www.nber.org/cycles/cyclesmain.html; http://www.calculatedriskblog.com/2018/04/the-longest-expansions-in-us-history.html

THE END OF A COLLEGE: https://www.mountida.edu/; https://www.commdiginews.com/business-2/mount-ida-college-closing-100908/; https://www.bostonglobe.com/metro/2018/04/11/lasell-college-deal-would-have-kept-mount-ida-open/87FQXnjnAg2JRkqYV9QrFN/story.html

OIL PRICES RISING: https://www.reuters.com/article/us-global-oil/oil-steady-near-three-year-highs-on-syria-tensions-tighter-supply-idUSKBN1HJ01E

COST OF HOPELESSNESS: money.cnn.com/2018/04/05/news/economy/employers-opioid-treatment/index.html; https://www.edc.org/financial-cost-suicide-us-nearly-twice-previously-thought; http://sihp.brandeis.edu/ibh/pdfs/R160%202015%20Shepard_Suicide.pdf; https://www.marketwatch.com/story/how-much-the-opioid-epidemic-costs-the-us-2017-10-27