Wall Street posted its worst weekly performance since the start of September, and has now notched a negative week in three of the last four. Slightly hot consumer and producer inflation data, along with a comment from Federal Reserve chair Jerome Powell on Thursday that suggested the central bank would not be “in a hurry to lower rates” weighed on markets, especially on Friday. For the week, the S&P slipped 2.1%, while the Nasdaq shed 3.1%. The Dow fell 1.2%.
After all the cheering from Wall Street on Donald Trump’s behalf, worry may have begun to set in. The Republican’s fiscal agenda threatens to rekindle inflation and may force the Fed to cut interest rates less than expected. CPI (Consumer Price Index) released earlier this week rose to 2.6% in October from 2.4% in September. While the one month increase did not shake market sentiment, the fear is what is to come from the new administration that has Wall Street on edge.
Future Wealth’s View
When market conditions change, it behooves us investors to review and rethink our assumptions on the holdings in our portfolio. Absent that reassessment, we may as well be the proverbial “Drowning Man”. For those who may not be familiar with story, here it is:
>>>A fellow was stuck on his rooftop in a flood. He was praying to God for help. Soon a man in a rowboat came by and the fellow shouted to the man on the roof, “Jump in, I can save you.” The stranded fellow shouted back, “No, it’s OK, I’m praying to God and he is going to save me.” So the rowboat went on.
Then a motorboat came by. “The fellow in the motorboat shouted, “Jump in, I can save you.” To this the stranded man said, “No thanks, I’m praying to God and he is going to save me. I have faith.” So the motorboat went on.
Then a helicopter came by and the pilot shouted down, “Grab this rope and I will lift you to safety.” To this the stranded man again replied, “No thanks, I’m praying to God and he is going to save me. I have faith.” So the helicopter reluctantly flew away.
Soon the water rose above the rooftop and the man drowned. He went to Heaven. He finally got his chance to discuss this whole situation with God, at which point he exclaimed, “I had faith in you and prayed everyday but you didn’t save me. You let me drown. I don’t understand. Why?”
To this, God replied, “You idiot! I sent you a rowboat and a motorboat and a helicopter, what more did you expect?”<<<
The stock market has already begun to rotate into sectors that could be beneficiaries under the new administration’s policies.
We should all pay attention.