It’s Beginning to Look A Lot Like 1994
It’s beginning to look a lot like Ninety-Four
Everywhere you go
Take a look at the Dow and Tech
Trading sideways once again
With volatility and earnings all aglow
It’s beginning to look a lot like Ninety-Four
Stocks in every home
But the prettiest sight to see, is the Rates that will be
Back to normal soon
An inflation rate the works and an economy that shoots
Is the wish of Powell and Trump …
Hat tip: Johnny Mathis & Meredith Wilson
Like 2018, 1994 was a midterm election year, the second year of a first term president after a solid market performance in the first year of the term – after a party switch in the White House. We also had a Fed in a relatively new tightening phase as we have now. The current tightening cycle has been going on longer, but in 1994 it started from a higher point and was increased at a much more accelerated pace.
But nevertheless, in the chart above comparing year-to-date 2018 action in the dotted lines to the 1994 market pattern in the solid lines with the Dow in black, S&P 500 in red and NASDAQ in blue you can see a striking similarity.
