The Hottest Day in Winter

The Hottest Day in Winter

By: Vicki Simpson

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Seattle posted its hottest winter day on record at a pleasant 79 degrees on Tuesday, March 19th. After a tumultuous end to 2018, we have seen the S&P 500 gain over 13% in the first quarter of this year! There are a couple of great lessons on perspectives to be gleaned from these two scenarios.

 
 
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First, it was still a cold winter in Seattle overall. (Snow for days! Does anyone remember that?) If we go back to Q3, prior to the correction, then we see the S&P 500 is up only 3%. International and emerging markets are solid for the quarter, but still negative for the last 12 months. A cool winter with some hot days in the markets.

 

Secondly, when we think of March, most of us think of springtime! I did not end that record-breaking day thinking, “Gosh! What a crazy winter day… 79 degrees!” The fact that March is “winter” is a scientific measure of the season, but we perceive it to be a season of transition. We are not surprised by fluctuating weather this time of year; a warm day can easily be followed by a storm.

We also saw the Fed put a halt to interest rate increases, perhaps tucking the umbrella under its arm. The yield curve is blowing in the wind, moving in and out of inversion. What does this all mean? By the standard measures, we are late in the market cycle. A recession is imminent, but it is difficult to predict exactly when it will arrive. It feels like March in the markets, we are experiencing some good and bad, while generally anticipating the next season.

As we all know in Seattle, you keep your sandals (plus socks) and your wellies next to the front door in the spring. We enjoy the unexpected warm days, but we know we are just as likely to need to shelter against the showers. We continue to monitor the markets and forecasts to prepare our clients and their portfolios for the changing seasons. Here’s to hoping we do not record the coldest day of spring this year!