A perspective from year-end 2018:

“As widely expected … the Federal Open Market Committee (FOMC) voted unanimously to increase its federal funds rate target by 25 bps, bringing it to 2.25%–2.50%. … the year-end read of fed funds futures prices indicated a nearly 90% probability of no Fed hikes in 2019. … the FOMC also reduced its projections for 2019 rate hikes from three to two.”

Those projections proved to be dramatically inaccurate. Indeed, the FOMC cut rates three times in 2019, bringing the target rate to 1.50%–1.75%. At year-end 2019, fed funds futures prices indicated a less than 50% probability of any Fed action in 2020, and the most recent “dot plot,” which illustrates projections of FOMC members, implied no rate cuts in 2020 and only one in 2021.

Those that follow Elon Musk on Twitter might be familiar with the above tweet that garnered the attention of the SEC (Securities and Exchange Commission) in August of 2018. Fortunately for Musk, he would only need to wait a year until Telsa's share price hit his $420 target on December 23rd of last year. While the Tesla CEO may have had his own issues securing funding, those in Washington have had no such problem as Congress moves to pass a bipartisan appropriations bill which would avert another government shutdown.

Attached to the bill itself, is a piece of bipartisan legislation called the Setting Every Community Up for Retirement Enhancement, or SECURE, act. The bill passed by Congress and signed by President Trump in December as part of a larger spending bill, has managed to stay off the radar of most major news outlets.

There are bull markets, there are bear markets and there are smiling mules. However, since the current U.S. bull market set a longevity record when it turned 10 years old this past March, equities have moved back and forth, sticking stubbornly to a narrow range. Rather than a bull or a bear, we think this market is more accurately described as a mule with a mind of its own.

Slowing global growth, an escalating trade war, emerging-market political risk and a less-accommodative-than-anticipated Federal Reserve (Fed) have conspired to generate a sharp pullback in the price of riskier investments. This has led to an unprecedented global bond rally as investors have sold out of stocks and searched for safety.

Recently, SEI Private Trust released a Research Commentary entitled, “Hawks, Doves and Greater Fools,” which we thought would be of interest. A summary of the conclusions is provided below: