The big business news this morning seems to be news on Apple from where an announcement was made that expected sales in the first quarter of 2019 might be softer than previously forecast … fanning the flames (as if this fire needed fanning) for those with the view that a global economic slowdown has begun.
As this stock takes up the second largest position in the S&P Index, makes up almost 5% of the Dow, and is … by far … the holding having the largest effect on the NASDAQ … a 9% decline (as it is seeing right now) is having a big effect on U.S. markets. And this is even before other stocks … which could suffer if an economic slowdown has indeed arrived … decline in sympathy.
So, should you head for the hills? Not according to Jeremy Siegel who, in the second article below, tells us 2019 will actually be a good year for equities. It might be important to note he is not always a raging bull, as I remember that at some point last year he called for caution.
We have entered day 13 of the partial government shutdown and it is being reported that there is “no end in sight” as both parties have promised to stick to their stated positions. This is the sixth “shut down” lasting longer than 10 days … with the record being 21 back in 1995-1996.
Let’s hope cooler heads prevail as much has been written about families living paycheck-to-paycheck. You can be sure some federal workers – whose pay has been temporarily halted – fall into this camp.
… but it is not only federal workers affected. What about the goods they buy (which are put off for now) … or the services they use? I even included an article today that claims home sales might be negatively affected as purchases (and sales) are delayed since income verification is nearly impossible with IRS offices closed.
Who is to blame? Probably us.
We have allowed ourselves to have leaders of substantial means, many who are not affected by the halting of a few paychecks … in fact, members of congress still get theirs.
I feel that every day the government is shut down our elected leaders should … not only receive no paycheck … but should face a substantial “fine” … for playing a game of chicken with people’s lives.
China just landed a ship on the dark side of the moon.
With apologies to Pink Floyd … I certainly wish some politicians were on board.
Have a great day,
Joseph G. Witthohn, CFA
Emerald Asset Management PA, LLC
610 Freedom Business Center Drive
King of Prussia, PA 19406
Direct: (610) 285-9905
… as of 10:12 AM today …
Quick Look at the News
What? An optimistic article on the economy? That's funny ... for what I've read lately told me we were at the start of a severe downturn (CNBC)https://www.cnbc.com/2019/01/03/december-private-payrolls-rise-271k-vs-178k-est-adpmoodys.html
... but not everyone is a pessimist. Jeremy Siegel ... who last year said we might be in for a rough patch ... feels this year will be a good one for the markets ... regardless of today's action (CNBC)https://www.cnbc.com/2019/01/02/whartons-jeremy-siegel-says-stocks-will-return-up-to-15percent-we-could-have-quite-a-good-year-.html
There is one group, however, fairly nervous today. Due to the government shutdown (okay ... partial shutdown) ... some home purchases might be delayed (Forbes)https://www.forbes.com/sites/kellyphillipserb/2019/01/02/shutdown-of-irs--other-government-agencies-is-causing-headaches-for-homebuyers--lenders/#3b6abed21d1e
Our country ... for quite some time ... has been known for its innovation. But we could eventually lose this edge ... which would be a problem (Time)http://time.com/longform/america-innovation/
... for other countries are not just sitting around. China just landed a ship on the dark side of the moon ... someplace we have yet to be (NPR)https://www.npr.org/2019/01/03/681825762/china-becomes-first-country-to-land-on-far-side-of-moon-state-media-announces
Oh darn. Here it is 2019 and the self-driving car isn't here yet. Are we ready for its arrival or will this be delayed for quite some time? (Bloomberg)https://www.bloomberg.com/news/articles/2018-12-31/self-driving-cars-a-main-event-at-ces-keep-tapping-the-brakes
Meanwhile, today's business news was filled with stories on Apple and disappointing iPhone sales. Will Apple bounce back? Will there be a blockbuster new product? An interesting year ahead (Bloomberg)https://www.bloomberg.com/news/articles/2019-01-03/here-s-tim-cook-s-memo-to-employees-about-iphone-sales-slowdown