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2019 Q1 Market Commentary

The S&P 500 rose by 13.1% while the Dow increased 11.2% and the NASDAQ climbed higher by 16.5%.  Now, raise your hand if you saw that coming.  Just ninety days ago we were discussing a government shutdown, rising interest rates, tariffs, an impending recession and more.  This news pressured the markets into one of the worst quarters that we have seen in years.  As we close this quarter out, the government is back up and running, we seem to be closing in on a trade deal with China, the interest rate on the 10-year treasury is at the lowest rate in more than a year and as a result the stock market posted its best start of the year since 1998.

 

Before we get too giddy here and sound the “all-clear” signal, we now are faced with a new set of issues.  Specifically, the yield curve in the bond market just “inverted” which means the 3-month treasury yield is now higher than the 10-year treasury.  Why is this important?  Yield curve inversions have often been followed by recessions.  However, it is important to point out that while a recession has always been preceded by a yield curve inversion, not all yield curve inversions have been followed by a recession.  In other words, this indicator is indeed alarming but it does not necessarily mean that we are headed for a recession.

 

The yield curve and macro-economic news will likely be the center of attention for the next several weeks.  Clearly, interest rate hikes are now off the table which is the reason for the rally over the past quarter.  However, the recession fears will certainly creep into the narrative in the coming weeks.  As the news feed plays out over the next several weeks, that will likely fuel the debate for interest rate moves and of course dictate the moves in the yield curve.  It should make for an interesting and possibly volatile quarter.

 

Chesapeake Financial Advisors is a fee-only financial planning, investment advisory and tax planning firm with offices in Towson and Columbia, Maryland.

 

Information included herein does not constitute investment advice and should not be viewed as a current or past recommendation to buy or sell any securities or to adopt any investment strategy.

Investments entail significant risks and are suitable only for certain investors as part of an overall diversified investment strategy and only for investors able to withstand a total loss of investment. In addition, there can be no assurance that current investments will be realized as projected. Actual realized returns will depend on, among other factors, future operating results, the value of assets and market conditions at the time of disposition, any related transaction costs, and the timing and manner of sale, all of which may differ from the assumptions on which the information contained herein is based. It should not be assumed that any investments described herein were or will be profitable. Forward-looking statements involve known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples and should bear in mind that past performance is not necessarily indicative of future results. Neither Thoma Capital Management LLC dba Chesapeake Financial Advisors nor any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were originally made.

Michelle

Michelle Koehler

Michelle’s career background includes working for a non-profit in Baltimore City whose mission is to inspire children and adults to achieve their potential through hands-on education, workforce development, health and wellness and violence prevention programming. She served as Education, Director and Grants and Contract Accountant for over 15 years. As part of the Chesapeake Financial team, to draws on this background as a foundation to assist clients reach their potential when it comes to strategic financial investments.

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