It is easy for emotions to get the best of us and lose sight of the big picture when the markets are so volatile. Political news feels like a rollercoaster ride in of itself. Every day it seems like someone is leaving the current administration, or some new policy is being proposed. Although policy may affect the economic health both domestically and globally, it will most likely not happen overnight. Some policies, like tax reform, may benefit the economy. We still won’t see the impact for several months, even though the markets reacted very positively to the new tax reform in a very short time throughout January. The recent news on inflation, interest rates, tariffs, trade war, and employment will all cause investors and managers alike to speculate one way or another on how it will affect the market, which may cause more volatility. The impact of policy change to the economy and ultimately corporate profits which drive stock prices is equivalent to trying to build a high-speed railway from L.A to Vegas. Not only will it take years, we are not sure it will even happen.

Stocks jumped ahead when the latest jobs report inspired renewed confidence in our economic standing. While talk of tariffs on aluminum and steel imports recently affected stocks, a major jobs report was arguably the biggest market mover. The data showed that the economy added far more jobs than analysts expected while wages only grew by 2.6% from this time last year, which was below expectations. This relieved many investors’ inflation concerns.

Bloomberg called the labor report a “Goldilocks’ scenario,” because it indicates that the economy is neither too hot nor too cold. The data reveals that many people are returning to the workforce, but wages are not increasing fast enough to trigger significant inflation. This is a key indicator for inflation.

We want to remind everyone that we are focused on long-term plans, not short-term market gyrations. We are continuously monitoring the current conditions and developing strategies that hopefully not only weather another downturn but may possibly create an opportunity to drive income in a rising interest rate environment. They say if you don’t study history, you are bound to repeat the past. There is a lot of noise out there, but at the end of the day, we have to wade through the noise and focus on both the short and long-term outlook of the economy as well as how to make sure each and every one of our clients are positioned to reach their goals, whether it be income in retirement or building wealth to the point they feel confident to retire.

The information provided is for guidance and informational purposes only. The articles are not the opinions of ProCore Advisors, LLC.