What Can Star Wars Teach Us About Investing?

What Can Star Wars Teach Us About Investing?

Saturday, May 4, has been known throughout the galaxy as “Star Wars Day 2019.” That date was chosen because it’s a play on words of the famous Star Wars maxim, “May the Force be with you.” Therefore, on May 4 we say, “May the Fourth be with you.” Get it?

Senior Market Strategist Ryan Detrick explained, “In honor of this day, we decided to take famous quotes from the Star Wars films and extract market insights. Quantitative minds would consider these spurious relationships, but those who believe in the Force might think otherwise.”

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Market Update: Mon, May 6, 2019 | LPL Financial Research

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Daily Insights

Trade tensions escalate again. Just as the headlines suggested a deal was close, President Trump’s threat over the weekend to raise tariff rates on $200 billion of Chinese imports and institute new tariffs on an additional $325 billion of Chinese goods has driven S&P 500 Index futures down more than 1% today. We still expect a deal in fairly short order for several reasons. This action conflicts with the tone of comments out of other key negotiators on both sides, and President Trump has a track record of getting toughest as negotiations near the finish line (NAFTA 2.0 is an example). Also, a deal is clearly in the best interest of both parties (Trump wants re-election and China wants growth). While this threat clearly increases short-term risk, and was a surprise to markets, we believe a path to compromise on using tariffs as an enforcement mechanism—the main sticking point—still exists. Continue reading

Weekly Market Drivers | LPL Financial Research

Stocks slightly higher after Friday rally

US: S&P 500 Index +0.2%, Dow -0.1%, Nasdaq +0.2%
Europe: STOXX Europe 600 -0.2%, German DAX 0.8% France CAC 40 -0.4%, U.K. FTSE 100 -0.6%
Asia: Japan Nikkei N/A, China Shanghai Composite N/A, Korea KOSPI +0.8%
Rates/Commodities: 10-Year Treasury yield -4 basis points to 2.52%, WTI crude oil -2.4%, COMEX gold: -0.4%

Modest gains gave way to mid-week selling pressure after the Federal Reserve (Fed) concluded its two-day monetary policy meeting. Then, a strong jobs report on Friday pushed the S&P 500 Index higher for the week.

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The Power of Productivity

The U.S. labor market may be kicking the economic expansion into another gear.

Consistent productivity growth has been largely absent from the expansion, even as payrolls and wages have grown at a healthy clip. However, strong labor market trends and last year’s pickup in capital expenditures growth could be sparking a resurgence in productivity, which we think could be key to future economic growth.

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More (Im)patience

The Federal Reserve (Fed) has promised patience, but financial markets now want more.

On Wednesday, Fed members unanimously voted to keep rates unchanged, and Fed Chair Jerome Powell repeated several times in his May 1 post-meeting press conference that further patience is appropriate. That patience, which soothed stocks earlier this year, spurred nearly a 1% intraday selloff in the S&P 500 Index.

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Market Update: Thurs, May 2, 2019 | LPL Financial Research

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Daily Insights

More (im)patience. The Federal Reserve (Fed) has promised patience, but financial markets now want more. Fed members unanimously voted to keep rates unchanged in the most recent policy meeting, and Fed Chair Jerome Powell repeated several times in his May 1 post-meeting press conference that further patience is appropriate. That patience, which soothed stocks earlier this year, spurred nearly a 1% intraday selloff in the S&P 500 Index. On the LPL Research blog today, we’ll dissect Powell’s comments, and outline why the Fed’s stance wasn’t what investors were looking for. Continue reading

Market Update: Wed, May 1, 2019 | LPL Financial Research

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More new highs. The S&P 500 Index closed at a new all-time high for the third consecutive day, capping its best April since 2009. This is the first year since 2013 that each of the first four months of the year have been higher. So far, the S&P 500 is up 17.5% for the year, the best four-month start since 1987. Shippers, semiconductors, and financials were the leading groups for the month, while biotech and gold miners lagged. Continue reading

Rate Cut Bets on the Rise

Markets have frequently underestimated Federal Reserve (Fed) actions over the last few years, but lately the skepticism has been striking.

Fed fund futures traders are increasingly betting on a rate cut, even as data show an economic rebound could be in progress. As shown in the LPL Chart of the Day, fed fund futures are pricing in a 40% chance of one rate cut and a 20% chance of two rate cuts before the end of 2019.

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