Skip to main content

A Kinder, Gentler Fed

December was a bad month for stocks. There’s no way to sugarcoat it. However, long-term investors recognize the need for a disciplined approach, but that doesn’t mean extreme levels of volatility won’t create some degree of concern. We understand this.
We touched a bottom on Christmas Eve, and shares extended gains into February. In fact, the Wall Street Journal ran an article stating the S&P 500’s advance last month was the best start to the year since 1987.

Table 1: Key Index Returns

  YTD %
Dow Jones Industrial Average 7.2
NASDAQ Composite 9.7
S&P 500 Index 7.9
Russell 2000 Index 11.2
MSCI World ex-USA** 7.0
MSCI Emerging Markets** 8.7
Bloomberg Barclays US 
Aggregate Bond TR

Source: Wall Street Journal,, Morningstar
YTD returns: Dec. 31, 2018—Jan. 31, 2019
**in US dollars

Much of the data suggests the economy continues to expand, but one important reason the bull market is waking up from its late-year slumber is the Federal Reserve.  In December, the Fed was talking about “gradual” rate hikes–possibly two this year. I placed gradual in quotes because that’s how the Fed phrased its guidance.

In late January, just six short weeks later, the Fed said it can be “patient” as it ponders the direction of rates. Yes, that’s right–the direction. When Fed Chief Jerome Powell was asked at his late-January press conference whether the next move in rates might be up or down, he didn’t tip his hand. Instead, he said it all depends on the economic data.  At this point, it appears the Fed’s on hold–no more rate hikes, at least through the shorter term and maybe longer.

It’s not that economic growth has stalled or even slowed considerably. The latest 300,000+ payroll number provided by the U.S. BLS would suggest the economy is not weakening.  But various surveys of consumer and business confidence have eased (University of Michigan survey, Conference Board, Wall Street Journal), and economic growth has slowed around the globe.  Throw in a cautionary signal from investors late last year (fears the Fed was poised to tip the economy into a recession if it continued to tighten the monetary screws), and the Fed shifted its stance.

February 2019

**Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. No strategy assures a profit or protects against loss. Investing involves risk including loss of principal.**


Keith Albritton 

Keith Albritton

Keith earned a B.S. in Finance from the University of Florida in 1991, and was a four-year letterman on the UF golf team that won two SEC championships and more than 12 team titles.

He joined Allen & Company in 1996 as a Financial Advisor. Keith is a CERTIFIED FINANCIAL PLANNER™ and Certified Investment Management Analyst®.
He holds both the Series 7 and 24 registrations with LPL Financial, and Series 66 with both LPL Financial and Allen & Company. Keith also holds the Life, Health and Variable Annuities insurance licenses.