Income Strategy Year End Review
How did we get here?
Negativity is Contagious.
Every action causes a reaction – so has the negativity just spiraled out of control to a self-inflicted recession? The fourth quarter started with a lot of promise as the third quarter ended with a lot of positives: 1) NAFTA being “resolved”; 2) the Fed continued on pace with its well-telegraphed interest rate hike (signaling a strong economy); and 3) oil at a 52-week high of US$76/bbl (WTI crude). However, the best highs seem to be short lived and the fourth quarter ended in a more dire state – oil went into a tailspin with WTI crude hitting a 52-week low of US $42/bbl with oversupply concerns, growth fears were amplified as Q3 earnings in the S&P were mixed from expectations (guidance were revised lower on trade tariffs impact and slower growth) as the S&P tumbled to a 52-week low. While the data coming out shows the economy continues to chug along (for now), skepticism continues to build as negativity continues to spread first in equities and then throughout every other market. It is a vicious cycle.