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S&P 500 up and yet lagging Emerging Markets

December was the worst performing market since the Depression and not surprisingly January is shaping up to be one of the best.  Even with today’s slight pullback, the S&P 500 is up 10% from the Christmas Eve low.

The move back to risk isn’t unanticipated, given December’s extreme (and I believe unwarranted) selloff.  What I do find fascinating is how well the market is holding up, given the prolonged government shutdown and headline corporate profit misses.

Will the market optimism last?  After such a volatile season, history suggests that a short term pullback to test the December low is very likely.  If that happens, I’d view it as a buying opportunity.

What I find most encouraging is not that the S&P 500 is up so much, but rather that Emerging Markets have been outperforming for the past three months.  (see chart)

PS- I’ve been negligent about releasing a new podcast episode…forgive me, one’s on the way.   On the bright side, I have been adding to the video content at YouTube…the latest video illustrates S&P 500 fair value and how that might impact 2019 performance:    https://youtu.be/36-148xJNBM


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