Remarkably it was a quiet week for the market. Though, on Friday the great news for the week began to get imputed into stock prices.
So, what happened last week? Stock investors and the markets here in the United States hit a grand slam. In baseball, a grand slam refers to a homerun with the bases loaded; this results in four runs being scored at once, the most that a team can score with one swing of the bat.
What comprised the grand slam for the markets? These four unrelated activities, which taken together will help markets surge to yet even greater heights:
- Boris Johnson’s Conservative Party victory in the United Kingdom’s (UK) Parliamentary elections. Doing so put a stake in the heart of the socialist movement in the UK. Hopefully, it will also put some sobriety into the minds of Americans and have them shun the growing socialist movement in the USA – i.e., Bernie Sanders, Elizabeth Warren, AOC and her “Squad”. Furthermore, it made Brexit a certainty. Brexit will benefit the UK’s largest trading partner and capital investor, the United States.
- Passage of the USMCA (US-Mexico-Canada) trade agreement by the House of Representatives. This replaces the outdated and flawed NAFTA (North American Free Trade Agreement). USMCA still need Senate and foreign approval but I am certain that will occur.
- Part 1 trade agreement with China. It was virtually impossible and impractical to get a comprehensive deal with the PRC (People Republic of China), so this first part was an important step in the right direction. Tariffs will be reduced and exports from the US of an agricultural nature highlights this Part 1’s agreement with China.
- While impeachment is not yet a certainty (some Democrats are already likely to vote against impeachment) it was the last delay that the Democrats could maneuver without getting back to a pro-economic legislative agenda set forth by President Trump. Within an hour of an announcement of drafting of two article of impeachment, the House passed USMCA. Now they can delay no longer and must address infrastructure, prescription price reform and other matters, all of which will be a boost to the economy and stock market.
Honorable mention also goes to President Trump’s executive order on Anti-Semitism. This was championed by liberals and conservatives alike. As a parent of a child at an American university, I have seen firsthand the growing scourge of this problem.
Between today and the end of the year, I am going to begin to ratchet back up exposure to the diabetic medical device and pharmaceutical sector. I am also taking some hard looks at sectors which will benefit from USMCA and China Part 1, beyond those for which we already have exposure.
While I have yet to finalize and publish my 2020 prognostications, I will say that the Grand Slam will justify nudging up my 2020 expectations for earnings and stock prices.
This is my last “regular” My Gut Feeling for 2019. Early next week I will publish my annual “List of 10 Things.” In early January I will publish My Gut Feeling for 2019 – A Look Back, where I compare my prognostications to reality and then My Gut Feeling for 2020.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was not long any positions mentioned – although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right-hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
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