The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Consistent With History?

01/13/2020

The Bank of America has an interesting forecast.  The current bull run in the stock market resulted from the relatively-sudden easing of geopolitical tensions, a decision on Brexit finally, and confidence in the November election, as well as highly supportive central banks (Fed & ECB).  The Bank believes these problems are not over, but merely “on hiatus.”  They believe the S&P will hit 3,333 by March 3rd, up from 3,265 now.

Then, reality will start closing in, with a listless stock market for most of the year.

Historically, the market loses steam and drops slowly during election years, until the market gains confidence in the outcome.

Remember:  There is an inverse relationship between stock prices and uncertainty.  As uncertainty goes up, stock prices go down, and stock prices go up when uncertainty goes down.

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