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We start a new trading week being given something of a breather: no major economic data is scheduled for release, no speeches from any members of the Federal Open Market Committee regarding interest rate policy, and even Q1 earnings season has entered its cyclical cooling phase (big Retail, small Tech and small Pharma companies mostly yet to report). We will be seeing earnings results from Walmart (WMT - Free Report) , Macy’s (M - Free Report) and Home Depot (HD - Free Report) , among others this week, but for now we can enjoy the relative silence.
That’s not to suggest things are silent elsewhere around the globe; indeed, we’re seeing geopolitical struggles among idealist lines (Socialism, fascism, etc.) the world over. There is also Middle East tension spilling over into deadly armed conflict, most newsworthy this weekend between Israel and Palestinians on the Gaza Strip. And whenever we see this general region begin to boil over, we can expect oil and gas prices to spike. Yet the U.S. economy is robust, the dollar is strong, and the stock markets have gained steadiness — witness the Dow’s current 7-day string of gains.
In fact, our current market reminds of nothing so much as the 1980s. A charismatic Republican in the White House slashing taxes and making broad moves in foreign policy, the U.S. providing clear economic leadership among advanced and advancing countries both, GDP estimates once again breaking north of 3%, and more deregulation coming to the banking and energy industries. Yet a plague of domestic drug addiction, growing incidents of gun violence, and socio-economic turmoil in Latin America (Nicaragua and El Salvador in the ‘80s, Venezuela today) illustrate the other side of this 80s coin.
However, spiking oil prices in the Middle East will have less of an impact here at home compared to 30-35 years ago, at which time we were much more reliant on those oil-rich countries, before fracking turned the U.S. once again into one of the top — if not the top (soon) — oil and gas producer in the world. Though then and now we saw strong GDP growth and low unemployment, back in the 80s we were still ratcheting down from extremely high interest rate levels, and these days we’re only seeing incremental shifts upward from historically low levels.
Also, in the 80s, Tech was still a high-growth industry, not yet fully realizing its economic potential. College students studied programming and entered the field straight out of school; these days, Tech is rich, mature and having its issues finding enough new employees with the proper skillsets to continue their growth trajectories, especially with a dampening of current U.S. immigration policy in play. Further, back in the MTV era, China was merely an economic plot-point for American industries to potentially address; today China owns tons of U.S. debt, supplies most of our cheap goods and is in danger of entering a trade war with the U.S.
So for all the similarities, we are also in a unique place currently. The best thing about history is that it’s there to be studied — if we can learn from the mistakes we made back in the 80s (consider things like the market crash of ’87), we can move forward even more strongly than we did then, more strongly than we are at present. Market futures 20 minutes before the open are modestly in the green; no major headlines are anticipated to shift market participants’ attitude at this hour.
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WMT, M, HD To Report Earnings Results
We start a new trading week being given something of a breather: no major economic data is scheduled for release, no speeches from any members of the Federal Open Market Committee regarding interest rate policy, and even Q1 earnings season has entered its cyclical cooling phase (big Retail, small Tech and small Pharma companies mostly yet to report). We will be seeing earnings results from Walmart (WMT - Free Report) , Macy’s (M - Free Report) and Home Depot (HD - Free Report) , among others this week, but for now we can enjoy the relative silence.
That’s not to suggest things are silent elsewhere around the globe; indeed, we’re seeing geopolitical struggles among idealist lines (Socialism, fascism, etc.) the world over. There is also Middle East tension spilling over into deadly armed conflict, most newsworthy this weekend between Israel and Palestinians on the Gaza Strip. And whenever we see this general region begin to boil over, we can expect oil and gas prices to spike. Yet the U.S. economy is robust, the dollar is strong, and the stock markets have gained steadiness — witness the Dow’s current 7-day string of gains.
In fact, our current market reminds of nothing so much as the 1980s. A charismatic Republican in the White House slashing taxes and making broad moves in foreign policy, the U.S. providing clear economic leadership among advanced and advancing countries both, GDP estimates once again breaking north of 3%, and more deregulation coming to the banking and energy industries. Yet a plague of domestic drug addiction, growing incidents of gun violence, and socio-economic turmoil in Latin America (Nicaragua and El Salvador in the ‘80s, Venezuela today) illustrate the other side of this 80s coin.
However, spiking oil prices in the Middle East will have less of an impact here at home compared to 30-35 years ago, at which time we were much more reliant on those oil-rich countries, before fracking turned the U.S. once again into one of the top — if not the top (soon) — oil and gas producer in the world. Though then and now we saw strong GDP growth and low unemployment, back in the 80s we were still ratcheting down from extremely high interest rate levels, and these days we’re only seeing incremental shifts upward from historically low levels.
Also, in the 80s, Tech was still a high-growth industry, not yet fully realizing its economic potential. College students studied programming and entered the field straight out of school; these days, Tech is rich, mature and having its issues finding enough new employees with the proper skillsets to continue their growth trajectories, especially with a dampening of current U.S. immigration policy in play. Further, back in the MTV era, China was merely an economic plot-point for American industries to potentially address; today China owns tons of U.S. debt, supplies most of our cheap goods and is in danger of entering a trade war with the U.S.
So for all the similarities, we are also in a unique place currently. The best thing about history is that it’s there to be studied — if we can learn from the mistakes we made back in the 80s (consider things like the market crash of ’87), we can move forward even more strongly than we did then, more strongly than we are at present. Market futures 20 minutes before the open are modestly in the green; no major headlines are anticipated to shift market participants’ attitude at this hour.