That Sure Felt Like A Bear

While technically not a bear market, it sure felt like one. From its September 20 high through Christmas Eve, the S&P 500 Index fell 19.8%, including a more than 7% one-week (December 14–21) decline unmatched since the 2008–09 financial crisis. Should the S&P 500 end the month where it closed on Christmas Eve, December would mark the third-worst month ever for stocks, behind only October 1987 (-21.8%) and October 2008 (-16.9%).

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Brexit Clouds Linger

Brexit uncertainty continues to cloud Europe’s economy. On January 15, more than two-thirds of the U.K. Parliament voted against British Prime Minister Theresa May’s European Union (EU) separation deal, another bump in the road for “Brexit.” That outcome had been anticipated, though the wide margin underscored the tough road ahead. Even though May survived a no-confidence vote the next day, the margin was narrow, and the path forward remains unclear.

Here we discuss potential market implications of the United Kingdom’s ongoing effort to leave the EU. We also share our updated views on European equities and reiterate our preference for emerging market (EM) equities over developed international equities.

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Fourth Quarter Earnings Preview: From Great To Good

Fourth quarter earnings reporting begins this week. Over the next five days (January 14–18), 35 companies in the S&P 500 Index will report quarterly results, highlighted by several big banks. Here we preview fourth quarter earnings, discuss several key drivers, and share some thoughts on the outlook for 2019. We expect a mid-to-high-teens increase in earnings for the quarter, driven primarily by the solid economic backdrop.

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