BEST FIRST HALF SINCE 1997. Why did the S&P rise 17% in the first half of 2019? By Todd Horwitz, Bubba Trading

 


The first half of the year is now in the books and it is one to remember. It was the best semiannual performance since the Spring of 1997. I am sure many investors don’t remember that because they were in grade school then, and that is what bothers me. After a ten-year bull run many of today’s traders have forgotten that bear markets still exist.

Why did the S&P rise 17% in the first half of 2019? Well there several reasons. We have the tensions in the Middle East with Iran, we have a looming trade war with China. We have the fears of an economic slowdown in the US as new jobs have begun to slow down and we have tension on the political front. All of those are good reasons for the equity markets not to turn in their best performance in 22 years. My point is it doesn’t matter what is happening. The market goes thru cycles and we have been in an upcycle.

But what happens if things return to normal. We see unemployment rise as we stop adding new jobs at a record pace. Minority ownership and wages start to decline. Student and auto loans start to default. Who is going to bail out the banks this time? The Fed’s balance sheet is already full and if outside investors decide not to buy our debt what is going to happen?
If you follow social media, they don’t talk about the unprecedented wealth that America is now enjoying. They would rather concentrate on the Mueller report on July 17. They are not concerned about this unprecedented winning streak. In short, they don’t have a clue about what it is like when the bear comes back for its visit. I hope they don’t have to learn the hard reality of that part of the economic cycle!

Todd “Bubba” Horwitz

Financial Markets and Political Commentary
 

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.