As we gather with friends and family to celebrate the Holidays and New Year, one can’t help but reflect on all that has transpired in 2019. Just a year ago, we had been in the midst of a 20% “correction” in the broader U.S. market indexes, the trade friction with China was in full swing, England was stuck in Brexit Neverland, and pundits from all corners of the media universe were calling for an economic recession in 2019. So, one might have been forgiven for spending most of 2019 in disbelief that the financial market rally in both equity and fixed income markets was just not real. Even as recently as mid-year, “experts” seemed incredulous that we could experience continued gains in employment and the associated consumer spending increases through the end of 2019. After all, we all know Santa is a fictitious children’s figure never meant to bring gifts to adults and otherwise rational human beings.
“Well Virginia,” as the Editor of the New York Sun wrote to a skeptical Virginia O’Hanlon back in 1897, “your little friends are wrong. They have been affected by the skepticism of a skeptical age.” Those words, which were written over a century ago, would appear to have offered the real truth of this season. Investors large and small, institutional and retail alike continued to sit on the sidelines obsessed with China trade and Brexit drama seemingly unaware that together with an easing Federal Reserve and strong fundamentals, dollar denominated long duration financial assets continued to appreciate.
Perhaps fear of the Grinch, that evil purveyor of inflation, was too much for most to overcome. Or perhaps there was a sense that Scrooge would ruin the Holiday by taking away all of the earnings we were counting on as if corporations themselves had thrown in all hope of a continued economic recovery.
“Alas! How dreary would the world be if there were no Santa Clause” the editor continued, how dreary indeed. Here at Clearbrook, we do believe in the benefits of hard work, rigorous and in-depth research, and humility. “In this great universe of ours, man is a mere insect, an ant, in his intellect as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.”