In a normal functioning economy you would see positive fundamentals as the driving force behind the stock market and expansion. When those fundamentals begin to weaken you see the effects in the stock market.
In the current US economy heading into 2019 we are witnessing the complete opposite relationship. The juiced up stock market from the FED has been fueling our macroeconomic fundamentals. Therefor since the FED has stopped juicing the economy with artificial stimulus-we are have seen many US index’s fall into bear market territory. The compounding effect on the stock market will double down when the weak numbers in the real economy begin to show up. We are already seeing weakness show up in real economic data.
Housing: Pending home sales have slipped each month for the last 10 months. November year over year home sales are down 7.7%
Empire State Manufacturing Index: Fell from 22.4 to 10. Missing an expected number of 20.
Philly Manufacturing index: Fell from 12.9 to 9.4.
Consumer Credit in December: Americans consumer credit rose by about 70%. American’s can’t afford to shop without credit cards for the holidays.
The fundamentals are weakening. Those fundamentals have yet to show up in asset classes such as the stock market and housing.
We are heading for a recession in 2019. Buy beaten down commodities like silver, gold, and potentially oil index’s in 2019.