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Optimism for Q4 Remains | LPL Financial Market Signals Podcast

November 05, 2018

LPL Financial

In the latest Market Signals podcast, LPL Financial Research strategists discuss why the S&P 500’s tumultuous October doesn’t dampen optimism for wages and for the economy.

Exactly 18 out of 18 times since every single midterm since WWII, 1946, 12 months later the S&P 500 was higher.

- Ryan Detrick - Senior Market Strategist at LPL Financial

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The S&P 500’s October was one of the worst months in years. In this week’s podcast, LPL Research strategists, John Lynch and Ryan Detrick, discuss why things may still look up by year’s end.

Since World War II, the S&P 500 has never been lower a year after midterm elections. Sitting presidents tend to lose Congressional seats during midterm years. That usually leads to some form of economic stimulus to boost the chance of re-election. The LPL Research strategists note that they don’t expect things to be different this year.

There are signs of an improving economy, as earnings continue to come in much better than expected. Year-over-year wage growth came in above 3% for the first time since April 2009. Many are worried this is a sign the economy is running too hot, but the strategists note this is actually a “sweet spot” for wages. It’s when wage growth reaches 4% that trouble can kick in.

Tune in for the podcast to get more on the LPL Research strategists’ read for what may lie ahead for the market and for the US economy.

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The S&P 500 low close in October was on the 29th. The good news is going back to 1950, the S&P 500 has never been lower from the October low close until end of the year during a midterm year.

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The calendar is a bull’s best friend, as the fourth quarter during a midterm year is actually the strongest quarter of the four-year presidential cycle. The following two quarters are two of the strongest as well.

For more insights, listen to the entire podcast. And make sure not to miss future podcasts by subscribing to LPL Market Signals on your favorite podcast platform.

 

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