On the December 22nd edition of Jerry Tuma’s Smart Money Radio Jerry said that the signs are now apparent that the bear market has begun in stocks, but that investors are currently in the “denial” stage of the three stage process for bear markets: denial, recognition and capitulation leading to panic. Most investors have been trying to figure out if the markets are in correction or turning over to a bear. Now the indicators are solidly bearish.

  • The Global Recession appears to have started in European and developing markets.
  • European banks look terrible.
  • Recession may be worse in the rest of the world, not as bad in the U.S.
  • The American stock indices are all in bear territory now. The NASDAQ 200 moving average has plunged below the technical support line. The S&P 500 is definitely in bear territory.
  • FANG stocks are all trading at bear market levels.
  • Bitcoin and marijuana stocks prices have plummeted.
  • Margin debt is very high and much of the selling may be forced liquidation of leveraged stock.

December losses such as these don’t bode well for the economy in 2019, which is ironic because the economy shows signs of real strength, with business profits high, unemployment low, and retail spending for the holidays solid due to taxpayers having more pay in their check thanks to tax reform. However, historically the economy also showed vigor in during the start of bear markets before taking it on the chin in a recession. As Jerry has often stated, “You can’t fight the Fed.”

Jerry announced that on January 14th he will have a special seminar on a new investment strategy for investors with a minimum of $300,000 in liquid, investable assets. If interested call 800-327-4285.

The Blame Trump Game

Meanwhile as rising interest rates and lowering liquidity spook the markets, John Harwood at CNBC blames…who else…Donald Trump because, well  Trump dared to say the Fed was raising rates too quickly. In Harwood’s minds it’s not the fault of the Fed raising rates that’s spooking the markets, its Trump pointing it out…that’s the problem!

Your football team didn’t lose because the quarterback threw four interceptions. They lost because the head coach said something about the quarterback’s performance out loud to the sports writers. If he’d keep quiet, the quarterback would hurl touchdowns and be victorious.

The Rasmussen poling firm says that President Trump’s handling of the economy is 47 percent in the latest poll, down three percent from October, but remains higher than President Obama held for most of his presidency.

“Economic and consumer confidence remain at record highs. Retailers are reporting their best sales in six years this holiday season.”—Rasmussen Report, December 28, 2018

What is missing in all of the criticisms of Trump is a critique is any specific ways in which his policies have contributed to market volatility. Perhaps the most concrete example critiques could point to would be his trade tariff policies, but even that has been muted by the President himself by allowing exemptions. But the tax cuts and deregulation have fueled the low unemployment and profitability boom. It is the reaction of the Fed with QT that is giving the markets the jitters, and Trump calling the Fed out on its monetary policy isn’t exacerbating what the Fed is doing to the markets and the economy.

Contact us Cornerstone Financial Services to sign up for the latest workshop if you have an investable portfolio of $300,000 or more.

Listen to the most recent edition of Jerry Tuma’s Smart Money Radio heard at 8am Saturdays on 660 The Answer in Dallas-Fort Worth.