The adage of “Sell in May and go away.” comes, apparently, from England — and long before electronic trading was even thought of.

The phrase we know today is only part of the original saying which was “Sell in May and go away, and come on back on St. Leger’s Day.” London traders, bankers, well-heeled merchants and various aristocrats would leave ‘The City’ to spend the warm Summers in the cooler and cleaner climes of the Cotswolds (or some such) and then return in time for the social extravaganza of a thoroughbred horse race called The St. Leger’s Stakes. With everybody out of town the markets, stocks and otherwise, would do exactly what you might expect: languish.

Fast forward to the 20th century and you can find similar migratory influence affecting Wall Street. As Summer approached traders and investors would make their way to the second home in the Hamptons (or some such). In their absence the markets would…languish.

With electronic trading, computer trading, remote access and other joyful technology things are much different today but still most two handed economists and other financial wizards will explain that ‘usually’ returns are better after Halloween and before Memorial Day. But the lower returns that might be expected in the warmer months are still positive. Isn’t positive a good thing? It sure beats nothing. And there’s more to consider: while the ‘usually’ thing may be true, we are not having a usual year.

Almost more than anything else the markets love it when expectations are exceeded. So, it’s noteworthy that in the most recent round of earnings reports, something like 80% of reporting companies have exceeded analysts’ expectations. A good reason why the first four months of 2019 have turned in performance that was last seen in 1987. (Yes, THAT 1987.)

Ron’s Market Minute 5/3/2019 — Rate Cut? What Rate Cut?

If you were watching the markets this week you may have noticed a bit of a temper tantrum. It appeared that a number of traders had convinced themselves that the Fed’s next move would be to drop rates. It didn’t happen, and in response we had a bit of a selloff. But, why should a cut have been expected?

The Fed is supposed to find a balance between inflation control and over-heating. And yet, if we take an honest look around, the economy seems to be doing that work all by itself. And, if the Fed were to step in at this point with a rate cut would that not send a signal that they are really concerned about an economic slowdown? That kind of thinking — and subsequent action — could go a lot farther toward creating a slowdown than preventing one.

This morning’s BLS Private Non-Farm Payroll report showed an impressive 236,000 jobs added in April. That’s another data point of exceeding expectations – the expected number was 179K. Also the unemployment rate dropped again. It’s now at 3.6%.

We don’t have 3.2% GDP growth, historic employment, wage growth, record corporate profits and ebullient consumer confidence in a rickety economic environment.

Enjoy your day.

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw[@]denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.

LFS-2527950-050319