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Pro Perspectives 1/9/20

January 9, 2020

Just six days into the new year, and stocks are up 1.4% already, printing higher record highs. 

Since we’ve been looking for a repeat of the late 90s for the economy and for stocks, let’s take a look at the way stocks performed to open the latter half of the 90s (hint: it was good).

Remember, we’re talking about the period that followed the 1995 flip-flop by the Fed, where the Fed was forced to reverse course on monetary policy after aggressively tightening into a low inflation, tepidly recovering economy.

They cut rates.  Stocks went crazy. And within four quarters the economy was printing growth above 4% (annualized).

And as we’ve observed, that was just the beginning.  Stocks went on to do this over the next four years …

And economic growth went on to do this …

With this in mind, as we open 2020, following the 2019 Fed flip-flop, stocks are already off to a hot start.  But it doesn’t mean we should expect things to cool down.  Here’s a look at the “January effect” on the late 90s …

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