{"id":8048,"date":"2019-05-28T17:10:21","date_gmt":"2019-05-28T17:10:21","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8048"},"modified":"2022-02-26T13:07:17","modified_gmt":"2022-02-26T13:07:17","slug":"bullish-or-bearish-here-is-my-view","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/bullish-or-bearish-here-is-my-view\/","title":{"rendered":"Bullish or Bearish? Here is My View"},"content":{"rendered":"\n<p><strong>I\u2019m Still Bullish\nUntil Proven Otherwise<\/strong><\/p>\n\n\n\n<p>On the surface, it looks like the bull market is hitting\nresistance on multiple fronts. Just when many market participants thought a\ntrade deal with China was in the offing, talks broke down and tariffs went up \u2013\nthe exact opposite of a \u2018market friendly outcome,\u2019 in my view. Now, as\ncorporations grapple with a new layer of uncertainty, the United States is also\ndealing with multiple geopolitical situations, from Venezuela to Iran to North\nKorea. And as if all these challenges aren\u2019t enough, earnings were flat in Q1. <\/p>\n\n\n\n<p>If some investors are starting to feel less bullish these\ndays, I\u2019d understand why. But I\u2019m not one of them. <\/p>\n\n\n\n<p>Let\u2019s take a closer look at\neach of the above-referenced situations and see what\u2019s really there.<\/p>\n\n\n\n<p>More&#8230;&nbsp;<br>\n&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;-<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_5_27&amp;content=stock_market_outlook_report\">Stay Steady &amp; Focus on Fundamentals!<\/a><\/strong><\/p>\n\n\n\n<p>Before I dive deeper into these stories, I want to point out\nhow important it is to keep an eye on economic indicators as opposed to making\nemotional, knee-jerk reactions. This can be difficult to do, especially in the\nmidst of so many negative news stories. So to potentially help you do\nthis, we are offering all readers a look into our just-released June 2019 Stock\nMarket Outlook report.<br>\n<br>\nThis 22-page report contains some of our key forecasts to consider:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>What produces U.S. optimism in 2019?<\/em><\/li><li><em>Forecast for the S&amp;P<\/em><\/li><li><em>Small-cap vs. large-cap returns <\/em><\/li><li><em>Which sectors are hot and which are not?<\/em><\/li><li><em>What industries within those sectors most\nmerit your attention?<\/em><\/li><li><em>Odds of recession<\/em><\/li><li><em>And much more.<\/em><\/li><\/ul>\n\n\n\n<p>If you\nhave $500,000 or more to invest and want to learn more about these forecasts,\nclick on the link below to get your free report today!<\/p>\n\n\n\n<p><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_5_27&amp;content=stock_market_outlook_report\"><br><\/a><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_5_27&amp;content=stock_market_outlook_report\">IT&#8217;S FREE. Download the Just-Released Stock Market Outlook<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_5_27&amp;content=stock_market_outlook_report\">1 <\/a><\/sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_5_27&amp;content=stock_market_outlook_report\">>><\/a><\/strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_5_27&amp;content=stock_market_outlook_report\">\u00a0<\/a><br><br>&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;<\/p>\n\n\n\n<p><strong>U.S. &#8211; China Trade: <\/strong>I\u2019ve said before that I believe a trade deal is a key factor in giving\nstocks room to run, so seeing these talks stumble was disappointing. The market\ndidn\u2019t like it either \u2013 on the day it became evident that talks weren\u2019t\nadvancing the S&amp;P 500 fell by over 2% with 90% of stocks declining.<sup>2<\/sup>\n<\/p>\n\n\n\n<p>We do not know when or if a\ndeal will get reached, and it\u2019s very difficult if not impossible to measure the\nimpact of uncertainty. But if we forecast a 0.3% or perhaps on the high end a\n0.5% hit to GDP as a result of increased tariffs, I think we\u2019re still a far cry\nfrom undoing 3.2% GDP growth (Q1 initial estimate). What\u2019s more, it\u2019s important\nto remember that exports only comprise around 12% of U.S. GDP, while\nconsumption accounts for nearly 70% of our economy.<sup>2<\/sup> To the extent\nprices don\u2019t go up too much with the latest round of tariffs, the U.S. consumer\nwill likely weather this storm. &nbsp;<\/p>\n\n\n\n<p>The one point of caution I\u2019d underscore,\nhowever, is that investors should not read too far into 3.2% GDP growth in Q1.<sup>3<\/sup>\nFor one, it\u2019s just an initial estimate. But second and more importantly, the\nstart of the trade war last year resulted in quite a bit of supply-chain\npadding for many corporations \u2013 which gave a one-time boost to GDP.&nbsp; Looking deeper into the data, an investor\nwould find that final sales (excluding inventories and net exports) grew at a\nmore modest rate of 1.4%\u2014the weakest performance&nbsp;since 2015. It\u2019s still\ngrowth \u2013 which keeps me bullish \u2013 but it\u2019s certainly late cycle growth, which\nkeeps me cautious. <\/p>\n\n\n\n<p><strong>Escalation\nwith Iran: <\/strong>We learned this week that Iran may be weeks\naway from exceeding an internationally-agreed cap on stockpiles of low-enriched\nuranium.<sup>4<\/sup> It follows that this development would make them steps\ncloser to production of nuclear weapons, which has drawn scrutiny from the\ninternational community and has led to posturing by both Iran and the United\nStates. <\/p>\n\n\n\n<p>Iran wants sanctions relief, while the U.S.\ncontinues to deepen sanctions and increase military prescence in the area.\nStatements by the U.S. National Security Advisor, John Bolton, made it appear\nas though the U.S. would be ready to engage militarily at any time, though\nPresident Trump has indicated he does not want war with Iran. For stock\nmarkets, an unexpected escalation or a miscalculation on either side would\nlikely result in volatility, but I\u2019m not convinced at this stage that either\nnation is doing anything more than posturing.<\/p>\n\n\n\n<p><strong>The\nWeak Earnings Picture: <\/strong>Looking at Q1 as a whole, earnings growth is expected to be\neffectively flat (down -0.1%) on +5.1% higher revenues. Investors generally do\nnot like to see flat earnings.<sup>4<\/sup> <strong><\/strong><\/p>\n\n\n\n<p>But there\u2019s an upshot here, too. Total earnings for the 450 S&amp;P\n500 members that have reported earnings showed 77.1% of them beating EPS\nestimates and 59.3% beating revenue estimates. Those are reasonable levels of\nearnings beats, and I think we can expect an earnings recovery in the second\nhalf of the year (assuming the trade dispute is resolved by then, which I think\nit will be).<\/p>\n\n\n\n<p><strong>Bottom Line for\nInvestors<\/strong><\/p>\n\n\n\n<p>Remember, the stock market has thrived historically even in challenging\nmoments. Over time, there are events and obstacles that seem insurmountable,\nand sometimes these events result in mass casualties or the destruction of\nnumerous businesses, banks, or even industries. Yet stocks have managed to\nbattle through the adversity and have continued throughout history to trend\nhigher, reaching new highs in every cycle. <\/p>\n\n\n\n<p>In some cases, the gains seem to defy logic, but at the end\nof the day it\u2019s just the course that history has carved (and will continue to\ncarve, in my opinion). Stocks love to climb a wall of worry, and <em>stocks have shown over time that solid\nlong-term returns have come to those who wait. <\/em>Waiting requires patience\nand an ever-constructive attitude about human potential and the potential for\nrelentless growth in the global economy. My constructive outlook today keeps me\nbullish until proven otherwise. <\/p>\n\n\n\n<p>I believe that one way to stay focused on the long-term, and not get swept up in short-term emotional reactions, is to focus more on the fundamentals then day-to-day price movements. To help you do this, I invite you to <strong>download our Just-Released Stock Market Outlook Report >><\/strong><br> <br> This Special Report is packed with our newly revised predictions for 2019. For example, you&#8217;ll discover Zacks\u2019 view on:\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Get more details on our bullish outlook for 2019<\/em><\/li><li><em>What about yield curve inversion?<\/em><\/li><li><em>What sectors show the best opportunity?<\/em><\/li><li><em>What industries within those sectors most merit your\n     attention?<\/em><\/li><li><em>What do we see for leading U.S. economic indicators\n     (LEIs)?<\/em><\/li><li><em>Small-cap vs. large-cap returns<\/em><\/li><li><em>And much more.<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, learn how you may be able to prepare your portfolio for changes in the economy by reading this new report today.<strong><sup>5<\/sup> <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I\u2019m Still Bullish Until Proven Otherwise On the surface, it looks like the bull market is hitting resistance on multiple [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71,1],"tags":[],"class_list":["post-8048","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8048"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8048\/revisions"}],"predecessor-version":[{"id":10753,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8048\/revisions\/10753"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}