Congratulations are in order! The Seattle Sounders now hold the MLS record for the longest single-season winning streak at nine wins (12 consecutive unbeaten)! Also, the U.S. economy bypassed the record for the longest bull market in mid-August! What’s in a record, though? As we all know, past performance is not a predictor of future results. This is true in soccer and the U.S. market. You can win and still struggle. Key players for the Sounders have maintained high-performance levels while others suffered injury or failed to excel in their positions. Some may argue that a few big players are driving the success of the U.S. bull market, but other players are lagging and underperforming. The team is still winning, but there is always room for improvement.
When one team (U.S.A.) is dominating the league, there are often teams that are feeling the pressure at the bottom of the standings. We have seen Emerging Markets steadily decline in Q3 due in large part to debt woes as the U.S. dollar strengthens. International Markets are down for the year, but have regained some ground even as trade wars continue to threaten investor confidence.
The longer the U.S. winning streak continues, the more often we ask the question “When will it end?” As a good coach would say, focus on the fundamentals and you will be better off in the long run. The U.S. economy continues to grow steadily. Corporate earnings are at record highs while unemployment continues to drop, inflation is creeping up as wages are increasing slightly. At the end of the quarter, we saw the Fed raise interest rates by another quarter percent, as expected. That will help contain inflation and enable savers to benefit but it will increase borrowing costs. At some point, we expect a correction.
The Seattle Sounders lost two in a row after posting their epic winning streak, but they keep moving forward. Will they win it all this year? No one knows. Every team in the league, despite their record, will be looking for ways to improve performance in the upcoming season. We can wave the rally flag for the underdogs in the markets, but for now, Go Sounders!