NEWS
What Happened Last Week
The International Longshoremen’s Association went on strike Tuesday, affecting ports across the East Coast. The strike ended Thursday when they reached a temporary agreement.
Iran launched ~200 missiles into Israel as a direct response to the assassination of Hezbollah leader Hassan Nasrallah.
Services PMIrose well above expectations in September, which indicates the services industry in the US is in expansion mode.
Manufacturing PMI remains in a slump, indicating contraction.
The US economy saw better-than-expected job growthin September, far above estimates and well above the 12-month average.
Investor expectations are high as investors interpret positive signs for the economy, according to the AAII Investor Sentiment Surveyand Fear and Greed Index.
How I See It
We see positive things happening across the economy. But remember, the economy and stock market do not always mirror one another!
Stocks move on the difference between expectations and reality.
Good news for our economy is that the costly port strike did not last more than three days.
Escalation in the Middle East did not create much reaction from stocks. While regional conflict can cause very short-term market reactions, it generally takes a much more global event to affect GDP on a scale that causes a bear market.
The job growth is a welcome sign which offers further hope that we may avoid a recession this time around.
But remember, this is widely known information! Therefore, there is widespread optimism, and that shows itself in the high price of market values.
Optimism can go on for a long time, even years, so it’s not an indicator that this market cycle is nearing its end. But it is something we want to watch closely in the year ahead.