307-586-4279 steve@odonnellwm.com

Market Update – March 2019

by Mar 9, 2019

History

This week marks ten years since the market hit its low point during the financial collapse in March of 2009. The Dow Jones Industrial Average hit 6443 on March 9, 2009. Since that time, the market, at least as measured by the DJIA, is up nearly 300% trading at more than 25,000. This demonstrates, in real terms, the power of the U.S. Stock market to create wealth over time.

Trade Deal

We are still waiting for President Trump and President Xi Jinping to sign a trade deal. The recent weakness in the stock market seems to be suggesting that a U.S. China trade agreement was already at least partially built in. Therefore, the longer we go without a deal, the more pressure it could put on the market. Conversely, the more weakness we have, the bigger the potential upside move on the news of a signed deal. So far, the deal, as it is shaping up, won’t require China to make significant changes to its economy. Enforcement of the terms of any agreement and the intellectual property protections are undoubtedly the two main issues delaying the process. The two sides will need to find enough middle ground on those issues to feel like they have both achieved a victory.

The Fed

With low inflation, slower growth in Europe, and China and the ongoing trade issues, the Fed is likely to maintain is “on hold” position with respect to interest rates for some time. The Fed’s recent forecasts are calling for U.S. economic growth to be above 2% this year, with inflation around 2%. These conditions hardly warrant continuing tightening by the Fed.
In a recent interview with 60 minutes, *Fed Chairman Powell stated that he thinks the economy is still strong, and going on to say * “I would say there’s no reason why this economy cannot continue to expand.” The chairman reiterated the Fed’s stance of making policy decisions based on data and not politics.

Recession

The official definition of a recession is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP). The definition of GDP is the final value of the goods and services produced within the geographic boundaries of a country during a specified period of time, normally a year. Although economic conditions can change rapidly, with GDP north of 2% and forecasts of 2% or better, we are presently quite a ways away from a recession.

Healthcare

We need to come together as a nation and address healthcare/health insurance coverage. **According to the Centers for Medicare and Medicaid Services, U.S healthcare spending grew 3.9% in 2017, reaching $3.5 trillion. That represents 17.9 percent of GDP. For many Americans, health insurance has simply become unaffordable.

Recently, J.P Morgan, Amazon, and Berkshire Hathaway have teamed up in an effort to address the growing healthcare problem. CEO’s Jamie Diamond, Jeff Bezos, and Warren Buffet respectively have announced that they have formed a non-profit called “Haven.” The initial focus is said to be on rising healthcare costs. They will begin by focusing on the healthcare needs of 1.2 million employees of their three companies.

***Haven Chief Operating Officer Jack Stoddard was recently quoted as saying that their goal is to make healthcare easier to understand, less expensive, and produce better outcomes.

***Haven CEO Dr. Atul Gawande lists the following as Haven’s guiding principles:

  • We will be an advocate for the patient and an ally to anyone — clinicians, industry leaders, innovators, policymakers, and others — who makes patient care and costs better.
  • We will create new solutions and work to change systems, technologies, contracts, policy, and whatever else is in the way of better health care.
  • We will be relentless. We will ensure our work has high impact and is sustainable. And we are committed to doing this work for the long-term.

Perhaps this is the beginning of some real, much needed, meaningful change in this area. We will be keeping our eye on Haven’s progress here at O’Donnell Wealth Management.

Peace!
Steve Sr.

This report was prepared by O’Donnell Wealth Management and reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

Sources:
* https://www.cnbc.com/2019/03/11/fed-chair-powell-the-law-is-clear-trump-cant-fire-me.html?recirc=taboolainternal
** https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nationalhealthaccountshistorical.html
*** https://www.cnbc.com/2019/03/06/amazon-jp-morgan-berkshire-hathaway-health-care-venture-named-haven.html

The author, Stephen P. O’Donnell Sr., is President of O’Donnell Wealth Management, a financial planning and asset management firm located at 1306 Sheridan Avenue in beautiful Cody, Wyoming. Steve has 18 years of experience, having worked as a portfolio manager for some of the largest firms on Wall Street. For a no cost, no obligation, initial consultation, call 307-586-4279, email, or simply stop by the office Monday through Friday.

Investment Advisory Services Offered Through Saxony Capital Management, LLC. Securities Offered Through Saxony Securities, Inc. Member FINRA/SIPC.

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