By Matt Schreiber – WBI President and Chief Investment Strategist
Futures are trending positive this morning as mid-term elections resulted in the expected outcome of a Republican President and a split Congress. Historically, that has been one of the worst combinations for markets. See the chart below.
Since 1901, the Dow Jones Industrial Average is down 6% per year historically under this combination. The road forward is less certain with many risks on the horizon. The Federal Funds Rate has climbed 800% since the Fed began raising rates in 2015. This has caused trends in new housing starts and existing homes sales to weaken. Historically, a weakening trend in housing has been a precursor to a looming recession. In the short-term, strong corporate fundamentals indicate markets are likely to rise. A trade deal with China, which appears likely to occur later this month, could also rally the market. Corporate fundamentals and the economy are expected to stay strong giving the Fed plenty of cover to continue to raise rates until it is too late and the rise causes a dramatic slow-down in the economy.
When market losses are more than investors can handle, they will bail and fail. We can help to mitigate losses and keep them invested to stay on plan.
Learn more about WBI’s active risk management approach. Click here.
Past performance does not guarantee future results. The views presented are those of Matt Schreiber and should not be construed as investment advice. All economic and performance information is historical and not indicative of future results. This is not an offer to buy or sell any security. No security or strategy, including those referred to directly or indirectly in this document, is suitable for all accounts or profitable all of the time and there is always the possibility of loss. Moreover, you should not assume that any discussion or information provided here serves as the receipt of, or as a substitute for, personalized investment advice from WBI or from any other investment professional. To the extent that you have any questions regarding the applicability of any specific issue discussed to your individual situation, please consult with WBI or the professional advisor of your choosing. This information is compiled from sources believed to be reliable, accuracy cannot be guaranteed. Information pertaining to WBI’s advisory operations, services, and fees is set forth in WBI’s disclosure statement in Part 2A of Form ADV, a copy of which is available upon request.
You are not permitted to publish, transmit, or otherwise reproduce this information, in whole or in part, in any format to any third party without the express written consent of WBI Investments, Inc.