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Lindsey Report – October 2017


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The equity markets (as measured by the S&P 500, the Dow and the Nasdaq) all proceeded to make several, new all-time highs in September. The month of September has historically been one of the worst months for equities, but that was not the case this year. Moreover, the Dow has notched some 40+ record closes this year (AP).

This is taking place during a period of continued low volatility, meaning we are not seeing big moves (up or down). It’s like the markets are taking “baby steps”: where most of those steps are forward.   I like this much better than the rapid, huge advances we experienced in late 1999.

The equity markets demonstrated this resilience even as three major hurricanes made landfall and did billions in damage. While I did not expect the markets to incur a major sell off, I did expect some response.

Although the markets moved little in response to the hurricanes, the hurricanes will certainly have an effect on the U.S. economy (not to mention all the households that were affected). After the economy grew by 3.1% in the second quarter (AP), there were many expecting similar results in the third quarter (Q3). Post the storms, many expectations were reduced for Q3. For instance, economist from Goldman Sachs reduced their Q3 growth forecast by 30% (CNBC).

As evidence of the impact, today the Bureau of Labor Statistics released the September jobs report, which showed a loss of (33,000) jobs in September. In the previous 12 months the economy had added, on average, 172,000 jobs per month. The hurricanes had a huge impact on the food services industry, as many restaurants and bars were shut down due to the storms (BLS).

There is a silver lining for the economy: these areas will rebuild. Homes and businesses will be rebuilt; millions of automobiles will be replaced, as will most household furnishings, etc.… The rebuilding effort in the many months ahead should be a lift for the overall economy.

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

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