Everything You Need to Know About Markets Today
If you listened to breathless newscasters — a generous description of a profession that is supposed to be objective — you’d be led to believe our economy is about to collapse because of the government shutdown.
The shutdown is now the longest in U.S. history. But the media warnings, along with the bear market proclamations, are dead wrong.
When the government shutdown started on Dec. 22, the S&P 500 was at 2,416. Last Friday, the S&P 500 closed at 2,670. This translates to over a 10% gain.
Regardless of how you feel about the government shutdown, there’s no question the stock market loves it.
The more important issue is whether this shutdown rally is a sucker’s rally or the start of even bigger profits to come.
Most of the stock market naysayers are quick to point out the “V” shape of the shutdown rally.
They’re right: Since bottoming on Dec. 24 at 2,351, the stock market has gone up 12 out of the 17 trading days.
It’s true “V”-shaped bottoms are not common, but they are not unprecedented. In 1998, the S&P bottomed on Oct. 8 after a 22% decline and then soared 29% to new highs by the end of November.
Thirty-year mortgage rates have dropped to 4.74%, the lowest rate since April 2018, and there has been a jump in home mortgage applications.
The jobs market is strong and getting better. In fact, the number of jobs openings is higher than the number of people looking for work.
U.S. industrial production has been on fire since 2016 and is now at an all-time high.
The root strength of the American economy is simple: Businesses make things and then ship those things.
When the economy is strong, the “makers” (industrial production) and “takers” (the transportation industry) are prosperous. American truckers enjoyed record demand last year and the highest amount of tonnage in two decades!
There’s more, but the big three of jobs, manufacturing and transportation paint a very rosy picture.
Yes, volatility won’t go away, but I’m confident the long-term path is still upward.
Continue to hold your positions.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch
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