Polar Vortex

We've been getting prepared for and dealing with this round of cold weather we're now having here in the Midwest so I'll publish a few thoughts today and hopefully be back on a more normal schedule sometime this week.

First, I am amazed at how much press time has been spilled all over the country on how cold it is here.  Yes it's cold and yes we're setting records but I'm now going to let you in on a secret....IT GETS COLD IN THE MIDWEST IN JANUARY!  While the degree of the weather is unusual, it is not uncommon for us to have a snap this time of year of below zero days.  

In the same vein the folks who are extrapolating huge economic losses from this better think again.  Yes, as in any weather event there are things that possibly won't be made up.  A conference scheduled for today and cancelled might not br rescheduled for example, but most spending right now is deferred spending.  This is a two or three day event.  We're not dealing here with the aftermath of a hurricane.  By this weekend here it's supposed to be in the 40s.  Ignore the economic doomsayers on this.  Also the fact that the worst of this is hitting early in the week this time of year makes this in my eyes more of a nonissue economically.  Put it simply Monday, Tuesday and Wednesday are not big entertainment days in Chicago in January.  I'm guessing that's the same in most parts of the midwest as well.

Stocks are poised to have a great January assuming we don't have a complete meltdown in the next two days.  Most major indices are up 6-9% for the month and therefore for 2019.  Of course if 2018 was a 13 month year instead of the usual 12 then most indices would be more or less flat.  My guess is that we're trading about where we would have back in December without all that late year nonsense.  Movement going forward will be based on market fundamentals and earnings for the rest of the year.

Stocks have seen a large amount of earnings compression in the past four months.  Probability suggests a lot of the bad news has been priced into stocks.  

There is very little chatter about how stocks could ramp if we come up with a trade deal with the Chinese.

Probability also suggests a rangebound market in at least the first part of 2019 until some of these issues are resolved.

Will try to post tomorrow based on weather.