“The economy looks very good.” – Jerome Powell
Pfäffikon SZ, Switzerland – As to be expected, sentiment (interest) played a significant role in the first trading week of the last quarter of 2018. Last Thursday the S&P 500 fell by 0.82%, which was the worst day in 99 calendar days. Measured over the previous week, the S&P 500 dropped one percent which is not so bad and at the same time feeds the hungry technical minds. Whether this minimal decline is the beginning of something bigger remains to be seen. Volatility has been gone for an extended period, and volatility may take some getting used to. Anyone who follows us for longer knows that we are not worried. The bears will return –that for sure– but if that is already the case, is the question.
There are two pillars further supporting the market. The first silent force is the attractive wage, which is good news, especially for the United States as a consumer society. A lesser-known silent force is the purchase of own shares. Companies have much cash and buy back their shares en masse. This creates the scarcity of shares as it were, which logically has an upward effect on this asset class.
Coming Monday promises to be a quiet day in connection with Columbus Day in the US. The agenda is limited filled. Particular attention will be paid to inflation, which remains well restrained. Additionally, the first business figures are approaching.
This material is communicated on October 7, 2018 by 1324 | by Thirteen Asset Management AG, Rietbrunnen 20, 8808 Pfäffikon SZ, Switzerland. This material is for information purposes only and is not intended to be a solicitation or invitation to invest. Any organizations or products described in this material are mentioned for reference purposes only. This material is intended only for investment professionals and professional clients and must not be relied upon by any other person. It is proprietary information of 1324 | by Thirteen Asset Management AG and may not be reproduced or otherwise disseminated in whole or in part without prior consent from 1324 | by Thirteen Asset Management AG. Alternative investments can involve significant risks and the value of an investment may go down as well as up. There is no guarantee of trading performance and past or projected performance is not a reliable indicator of future performance. We recommend to consult your bank, investment and/of tax adviser.