Financial Markets Commentary 4th Quarter 2019Submitted by Capital Strategies Financial Corporation on January 30th, 2020
2019 closed on a high note for stocks as interest rate cuts fueled a speculative boom which has continued into 2020. Against a backdrop of accommodative central banks all over the globe and a somewhat more cordial relationship between the world’s two foremost economic powers, investors everywhere became more aggressive. With dividends reinvested, the S&P 500 soared 31.49% on the year. 9.07% came in the fourth quarter alone. Returns around the globe were almost as strong; international developed markets were up 22.49% while emerging markets were up 18.42%. The outstanding returns in 2019 were somewhat surprising given the fact that corporate profits fell during the year. It’s important to recognize that our market gains are increasingly dependent on corporate leverage and government reserves. We are not predicting the stock market rally’s imminent end, but debt expansion like this can’t go on forever.