Fourth Quarter Market Commentary
The fourth quarter was dramatic in the financial markets, with a notable increase in stock market volatility. Interest rates rose throughout the year, then fell during the quarter; oil prices plunged to close the year at about $45.00 per barrel. Federal Reserve Chairman Jerome Powell made hawkish comments about continuing to raise interest rates for another year or two, seeming to be out of touch with market expectations. The year finished with continued worries about a global economic slowdown and economic conflict with China.
2018 will go into the books as a year in which nothing worked very well. Domestic stocks were down, bonds were flat, and international stocks were even weaker. However, we remain optimistic about the market going forward, as economic numbers continue to be very good. The fundamentals of the U.S economy and earnings have been healthy. The broadest measure of the economy, the gross domestic product (GDP), had a growth rate of 4.2% for the second quarter and 3.5% in the third quarter. The fourth quarter is widely expected to be about 2.5%, meaning that the full year should be about 3%. Job creation has been strong, and the unemployment rate has fallen to 3.7%, its lowest level in decades. Weekly unemployment claims have hit 50-year lows. Retail sales were very strong during the holiday shopping season as the result of a surge in consumer confidence.
Corporate earnings growth was very strong in 2018 with the second and third quarters showing year-over-year gains well in excess of 20%. Tax law changes helped drive these gains, as well as the elimination of many job-killing regulations. The sharp sell-off in the fourth quarter may set the stage for recovery and a potentially good year in 2019. The outlook for the economy continues to be positive, and we believe it is unlikely that we will dip into a recession in the year ahead.
9258 Tax Preparation and Planning Welcomes Edwina!
The fourth quarter was dramatic in the financial markets, with a notable increase in stock market volatility. Interest rates rose throughout the year, then fell during the quarter; oil prices plunged to close the year at about $45.00 per barrel. Federal Reserve Chairman Jerome Powell made hawkish comments about continuing to raise interest rates for another year or two, seeming to be out of touch with market expectations. The year finished with continued worries about a global economic slowdown and economic conflict with China.
2018 will go into the books as a year in which nothing worked very well. Domestic stocks were down, bonds were flat, and international stocks were even weaker. However, we remain optimistic about the market going forward, as economic numbers continue to be very good. The fundamentals of the U.S economy and earnings have been healthy. The broadest measure of the economy, the gross domestic product (GDP), had a growth rate of 4.2% for the second quarter and 3.5% in the third quarter. The fourth quarter is widely expected to be about 2.5%, meaning that the full year should be about 3%. Job creation has been strong, and the unemployment rate has fallen to 3.7%, its lowest level in decades. Weekly unemployment claims have hit 50-year lows. Retail sales were very strong during the holiday shopping season as the result of a surge in consumer confidence.
Corporate earnings growth was very strong in 2018 with the second and third quarters showing year-over-year gains well in excess of 20%. Tax law changes helped drive these gains, as well as the elimination of many job-killing regulations. The sharp sell-off in the fourth quarter may set the stage for recovery and a potentially good year in 2019. The outlook for the economy continues to be positive, and we believe it is unlikely that we will dip into a recession in the year ahead.
Edwina Martin
CPA
Vice President
Assistant Director Tax Planning
Congratulations Matt!
Recently, Matt Tranquilli successfully tested for and received his CFP® certification. This certification is owned and awarded by the Certified Financial Planner Board of Standards, Inc. A candidate aiming to earn the CFP® designation must meet requirements in four categories: education, work experience, ethics, and the CFP® exam. The exam focuses on over 100 topics of concern to the financial planning field, such as taxes, insurance, estate and investment planning, and retirement. The candidate must answer 170 questions which include case studies, multiple mini-case problem sets and stand-alone questions designed to assess the students ability to apply his or her knowledge of the aforementioned areas.
Attaining the CFP® designation takes experience and a substantial amount of work. CFP® professionals must also complete continuing education programs each year in order to maintain their certification status. The CFP® certification mark represents one’s proven expertise within the financial planning profession. Matt serves 9258 Wealth Management as an Executive Vice President, and Director of Retail and Retirement Plan Operations. In addition he was recently named the Director of Tax Planning for the newly formed LLC subsidiary, 9258 Tax Preparation and Planning.
