Market News – Week of February 12th, 2018

IN CASE YOU WERE NOT PAYING ATTENTION:

Latent anxiety turned into active fear this past week. If you remember, the prior week ended with a sharp dive in the market as initial signs of some inflation and rising interest led to universal pessimism. Investors started pulling their money from the markets at a brisk pace. Many believe this is just an overdue pullback because of how rapidly the market has risen. In any event, stocks officially entered into “correction” territory on Thursday as the S&P 500 fell more than 10% from the most recent market high on January 26. It bounced back a bit on Friday. Of course, we don’t know what will happen on Monday, but it is more important than ever to have a plan that will allow you to ride out these times. If you were not paying attention, that’s okay. You must have a plan that allows you to do that!

IS THIS NEW?:

Last year was exceptional. Last week was not. Here are some statistics from 1900 to 2016. On average, the market sinks by 5% or more three times a year. On average, it goes down 10% about once per year. It goes down 15% or more every two years and 20% or more about every 3.5 years on average.

AMID MARKET ROLLER COASTER, ECONOMISTS REMAIN OPTIMISTIC:

Economists surveyed in the past few days by the Wall Street Journal predict 2.8% growth in U.S. gross domestic product in 2018. They also predict the unemployment rate will drop below 4%. Although inflation and interest rates remain legitimate longer-term concerns, the general consensus seems to indicate that the recent market volatility is a reaction to prices being too high for comfort, and in need of some “correcting”, but economic fundamentals continue to point to corporate earning growth.

IS DEMAND FOR STARTER HOMES READY TO ROCKET?:

According to Housing Analyst Josh Steiner, yes, by about 2020:

“The group we’re focused on are the Millennials. And the reason we’re looking at them is twofold. One, because the average age at which someone buys their first home is 32 to 33 years of age. Meanwhile, the average age that they rent their first home is 26 to 27 years old. So, what’s interesting about this slide is if you look at how many more 26 and 27 year olds there are, than 32 and 33 year olds, you should be able to see what’s coming down the pike over the next 5 to 6 years. There is going to be a massive influx of would be first-time homebuyers.”

References:

IS THIS NEW?: https://indigomarketingagency.com/communicate-clients-market-volatility/
IN CASE YOU WERE NOT PAYING ATTENTION: https://www.wsj.com/articles/asian-shares-lack-direction-1518051458?mod=searchresults&page=1&pos=13
AMID MARKET ROLLER COASTER, ECONOMISTS REMAIN OPTIMISTIC: https://www.wsj.com/articles/economists-stick-with-optimistic-u-s-outlook-despite-market-turmoil-1518102001
IS DEMAND FOR STARTER HOMES READY TO ROCKET?: https://app.hedgeye.com/insights/65327-millennials-may-ignite-an-epic-housing-bull-market-in-2020