Vision 2020: One Essential Insight for the Year Ahead
Vision 2020: One Essential Insight for the Year Ahead for Economic Prism
On Christmas Day 2018, roughly one year ago, President Trump provided the following market analysis:
“I think it’s a tremendous opportunity to buy. Really a great opportunity to buy.”
If you recall, the U.S. stock market was in freefall when Trump made these utterances. Between September 20, 2018 and Christmas Day 2018, the S&P 500 dropped 19.78 percent – within a hairline of an official bear market. What’s more, the S&P 500 was at a 20 month low.
The Donald, however, proved himself a “very stable genius.” For he pinpointed to the day, to the minute, the bottom of the late-2018 swoon. From Christmas Day 2018 to Christmas Day 2019, the S&P 500 rose over 36 percent.
Of course, hindsight’s always 2020. Buying the dip one year ago now seems so obvious. But, at the time, it required heavy conviction and intestinal fortitude.
Naturally, it’s easy to know the right thing to do after something has happened. Perhaps Trump deserves a Nobel Memorial Prize in Economic Sciences for his prescient market call. More likely, he knew he had an ace up his sleeve…
After calling the CEOs of the six largest banks on December 23, 2018, Treasury Secretary Steven Mnuchin convened a Christmas Eve call with the President’s Working Group on Financial Markets – i.e. the Plunge Protection Team (PPT). The purpose of the call was to discuss coordinated “efforts to assure normal market operations.”
Make of it what you will, 2019 was a fantastic year to buy the S&P 500. But what about 2020?
Sights On 2020
Today, with perfect 20/20 vision, we set our sights on the year ahead. After all, the New Year’s nearly here. What better time than now to peer out 12 months through our proprietary prism and report back what we discover?
On first glance, we see new dreams, new directions, and new delusions just over the horizon like swirling storm clouds interspersed with warm radiant light. We see opportunities and contretemps. We see doom and despair. And we also see hope and redemption.
Make no mistake, 2020 will be the year that everything happens precisely as it should. Some good. Some bad. Each day shall unfold before you with reciprocal imbalance. You can take that to the bank.
But what else? What are the essential insights we should take with us as we set out to make another pass around the sun? What about stocks, the 10-Year Treasury note, gold, and everything else? Will collateralized loan obligations (CLO) be roiled by mass corporate defaults? Are we fated for complete social distortion? Will this be the year to fight the Fed?
Today we attempt to answer some of these questions with humility and modesty. Predicting the future, like Fed monetary policy, is primarily guesswork. But unlike the Fed, we acknowledge our limitations.
Our methodology is rudimentary. We eschew popular forecasting techniques – including trend lines and data driven models – for a conjectural approach. First, we ingest all matters of fact and fiction. Then, through gut check filtration and biased interpolation we arrive at precise, unequivocal answers.
But before we get to it, a brief disclaimer’s in order. This proviso from King Solomon should suffice:
“A fool also is full of words: a man cannot tell what shall be; and what shall be after him, who can tell him?” – Ecclesiastes 10:14
With that out of the way, we sharpen our pencils and face our limitations. This year we’ve done something extra special – and we’ve done it just for you. After much laboring and teeth grinding we’ve distilled what will come in 2020 down for you to it’s very essence. What follows, for fun and for free, is one essential insight for the year ahead.
Vision 2020: One Essential Insight for the Year Ahead
The late Marty Zweig, in his book Winning on Wall Street, which was published in 1970, included the following observation:
