Cool Video: Fox Business--Stocks and the US Consumer

I joined Varney and Company on Fox Business TV earlier today.    Varney had liked by bullish call on stocks from the end of last year, but seemed dismayed that I have turned cautious.  I suggested that the S&P are approaching a key area a little above 2800 that has capped in Q4 18.  

In addition to these chart points, I am concerned that the S&P 500 has rallied more than 10% in the first half of the first quarter.  This is despite the continued reduction in earning expectations and some recent data that was softer than expected, including last week's December retail sales. 

The headline fell 1.2% and the components used for GDP calculations dropped 1.7%.  The median expectations in the Bloomberg survey for for 0.1% and 0.4% respectively.  Note that the three-month moving average of the control group fell 0.1% in Q4, the first negative reading since September 2016.  This prompted the Atlanta Fed to cut is Q4 GDP tracker to 1.5% from 2.7%.   

This was followed by a 0.6% decline in January industrial output, led by a 0.9% drop in manufacturing production.  Capacity utilization was fell to 78.2% from a revised 78.8%. The NY Fed's Nowcast for Q4 18 was shaved 0.2% to 2.2%, but Q1 19 estimate was halved to 1.1%.  

I suggest that the pendulum has swung from fear at the end of last year back to greed.    I noted an article in today's Financial Times by John Plender that dew on research from TS Lombard that concludes that equities account for a a new record share of Americans household net worth, and it is more than real estate for only the third time since the end of WWII.  

Stuart asked about his Microsoft stock toward the end of the discussion.  I purposely punted because I do not think that is one generic answer.  A good financial adviser would take into account his risk appetite, retirement intentions, and other assets in his portfolio.   Those who give financial advice must accept a version of the Hippocratic Oath: minimize the risk of doing harm.  There is no generic formula that is good for everyone all the time.  

Click here for the 2 3/4 minute clip.  

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