Weekly Market Digest: A Decade in Review

It was a strong week for U.S. equities that shrugged off impeachment proceedings to notch broad gains and new all-time highs. The biggest news of the week was that President Donald Trump is now only the third U.S. president to be impeached. Consistent with party lines, the House passed articles of impeachment for charges against Trump of abuse-of-power and obstruction of Congress. House speaker Nancy Pelosi chose to delay sending the articles of impeachment to the Senate until there was more clarity on the rules for the trial. This move likely pushes proceeding well into the new year. It is largely expected that President Trump will remain in office despite impeachment because of the Republican controlled Senate who will ultimately decide his fate. A fitting end to a remarkable decade.

Weekly Returns:

S&P 500: 3221 (+1.65%)
FTSE All-World ex-US (VEU): (+1.03%)
US 10 Year Treasury Yield: 1.92 (+0.10)
Gold: $1,477.86 (+0.16%)
EUR/USD: 1.1078 (-0.39%)

Major Events

• Monday – The three major U.S. indices rallied to new highs on the back of news that the U.S. and China reached a Phase 1 deal Friday.
• Tuesday – Boeing neared its 52-week low following more bad news that it will suspend production of the 737 Max jet.
• Wednesday – House Democrats voted to impeach President Donald Trump.
• Thursday – Sweden’s central bank, who was the first pioneer to take interest rates negative, raised their key rate to zero.
• Friday – Consumer spending and income beat expectations boosting optimism over the holiday season.

Highlights From the Past Decade

Despite plenty of global political turmoil, it has been a decade of low market volatility, strong market returns, and slow but steady growth. Rising from the depths of the prior “lost decade”, the last ten years will be remembered as a period of massive central bank intervention and experimental (negative) interest rate policies, unicorns, big tech, the power of social media, and political unrest.

Here is a timeline of some of the major defining moments for global markets. A tribute to the only decade in history without an economic recession, yet plenty of noise to think one was coming!

Chart Source: © 2018 The Evidence-Based Investor

For me personally, some of the most memorable moments in the industry over the past decade were:

• Flash Crash
• Taper Tantrum
• A remarkable 77% drop in crude oil
• The two-day Brexit market meltdown and rebound for that matter
• The two global stock market sells-offs in 2016 and 2018

And of course, passively witnessing the cryptocurrency bubble form and burst. When I say memorable, that does not mean enjoyable! Much of my time was spent witnessing these events from behind a Bloomberg terminal and if I have learned anything over the past ten years, it is this… The trick to investing successfully is keeping your focus on the long-term. The noise is there to test you and is what makes investing challenging. Be humble, no one knows the future, and those that think they do are the ones redistributing to the rest of us!