INSIGHTS FROM FIRST FOUNDATION

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The Week Ahead – The Super Bowl

Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.

Can’t keep winning. Too old. Long in the tooth. Close to the end of the cycle. Regression eminent. Wait, are we talking about the U.S. economy or are we talking about the New England Patriots? Six Super Bowl wins in seventeen years (at the expense of our Los Angeles Rams nonetheless). Patriots star quarterback Tom Brady is now the only NFL player to win six Super Bowls and the only player to appear in nine Super Bowls. Much like the many pundits who wrote off Tom Brady and the Patriots the past few years, many investors wrote off the U.S. economy and equity markets in the fourth quarter of 2018. January sure felt much better than December for investors, but did you know that the S&P 500 just posted its best monthly total return since 1987? Meanwhile, the VIX index (volatility) declined 35%! How quickly things change! A positive January historically has led to a positive year 92% of the time since 1936, with an average S&P 500 return of 19.4%. Caveat, we had a positive January (+5.6%) last year too, so take it for what it’s worth. As my colleague Louis Abel wrote in his latest commentary, Winter Is Here, there are many reasons why we’re optimistic for 2019.

The week ahead will be relatively quiet compared to last week’s waterfall of data (how about another solid employment report with payrolls growing 304,000 and the unemployment rate slightly ticking up to 4%). Investors will be looking to see if the ISM Non-Manufacturing index can bounce back in January after December’s surprise large decline. Additionally, with all the trade rhetoric currently making headlines, keep an eye on the U.S. trade balance numbers on Wednesday. Lastly, Fed Chair Powell and Vice Chair Clarida will be speaking at events this week, on Wednesday and Thursday respectively. Let’s hope they stick with the dovish script! Don’t worry L.A. Rams fans, Vegas already has the Chiefs as 6/1 favorites for next year’s Super Bowl, closely followed by 8/1 odds for the Rams, Saints … and Patriots.

Data deck for February 1-February 8:

Date

Indicator

Period

February 4

Durable Goods Orders (Final)

November

February 4

Factory Orders

November

February 5

ISM Non-Manufacturing Index

January

February 6

Trade Balance

November

February 6

Nonfarm Productivity (Preliminary)

4Q18

February 7

Initial Jobless Claims

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Andrew Chan, CAIA, Co-Chief Investment Officer
About the Author
Andrew Chan, CAIA, Co-Chief Investment Officer
Mr. Chan co-leads the strategic investment committee and is responsible for overseeing First Foundation Advisor’s investment solutions platform which includes conducting investment manager research for both traditional and alternative investments as well as asset allocation guidance for portfolio construction. As a member of the investment committee, he provides market commentary and investment insights to clients. Additionally, Mr. Chan serves as a senior executive on the business strategy committee providing guidance on firm wide initiatives. With over 15 years of wealth management experience, Mr. Chan has played key roles across various aspects of investment and wealth management. Prior to joining First Foundation Advisors, Mr. Chan was most recently a portfolio manager at U.S. Trust where, in addition to his daily responsibilities, he served on numerous national committees including the investment manager committee, the portfolio model committee, and the strategic technology committee. He also served on the in-house strategic consultant committee reporting directly to the President of U.S. Trust. Mr. Chan is a graduate of the Wharton School Executive Program on Investment Management and holds a Bachelor of Arts degree in Business Administration from the University of California, Riverside. He is a Chartered Alternative Investment Analyst (CAIA). Mr. Chan has previously served as an exam working group member and as an exam grader for CAIA. A member of the CAIA SoCal Executive Board since 2015, Mr. Chan has served as executive chapter head since 2017. Read more