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Gridlock is Alive and Well | Crouch Connection, April 2017


The Trump Rally is fading and many of us are facing the reality that gridlock in Washington is alive and well. From the repeal of Obamacare to tax reform, from the infrastructure stimulus package to the rollback of Obama-era regulations, most of the market-friendly policies that had been anticipated since the election are now facing daunting political headwinds (this will please several of my friends).


But I must thank Andrew Adams in the Raymond James Investment Strategy Group for capturing the essence of this crazy market in his strategy piece this morning (April 19), subtitled “The Wall of Worry”.

Bull markets are said to climb a wall of worry, so we like to keep track of some of the headlines that investors must digest on a day-to-day basis. Over the last few years, there has been no shortage of uncertainty, but the stock market has soldiered on throughout it all to make new all-time highs again and again.

Everything on the list below, even if it wasn’t outright negative, at least had to be analyzed by the market and received no shortage of coverage in the financial media. Yet, secular bull markets are tough to stop and the market’s resiliency is a clear sign of strength in our minds.

  • The U.S. debt downgrade

  • The fiscal cliff

  • The sequester

  • The government shutdown

  • Dodd-Frank

  • ObamaCare

  • Rumors China would implode

  • The call that interest rates would skyrocket

  • Europe’s debt crisis

  • A potential U.S. debt default

  • Fukushima

  • The Arab Spring

  • Iran

  • North Korea

  • Egypt

  • Syria

  • Ukraine

  • Airline disasters

  • Natural disasters

  • Strong dollar

  • Fed tapering

  • QE ending

  • ISIS

  • Ebola

  • Currency dislocations

  • Oil collapse

  • “Grexit”

  • China currency fears

  • Fed raising rates

  • Zika

  • “Brexit”

  • Terrorism

  • Social unrest in U.S.

  • U.S. election

  • “Quitaly,”

  • Trump policy uncertainty

  • Syria again

  • North Korea again

  • etc.

And yet stocks have stayed resilient and continued to make new all-time highs!!!

Thanks, Andrew, for reminding us that the market doesn’t care about many of the issues we mortals worry about. In the long run, the issues that affect the earnings of the public companies we are invested in are what matter, and we need to focus on the economic forces that drive those earnings.


This week marks the beginning of the roughly four-week period called “Earnings Season” when most public companies report quarterly earnings. Per Zack’s Investment Research, first quarter earnings are expected to be up a very healthy 6.5% from the same quarter last year.

Several of the big banks have already reported, and they have not reported the boost to their bottom line that we would have expected from the recent Fed-induced interest rate increases, so we must see how the other sectors perform.


Geopolitical events seem to affect our collective moods more than almost any other news. While the disturbing effects of war and terrorist attacks on innocent lives are certainly appalling, as investors, we need to look beyond the news at the second-derivative impact the events have on the economy and business. While disturbing, the fact is that many of these events do not severely impact the economy or the businesses that make up the public markets to the degree you might expect.

I give much of the credit to the amazing men and women who have transformed our oil industry and have greatly reduced America’s dependence on foreign oil! In the past, geopolitical events were always a threat to the oil supply chain that delivered this precious commodity to our nations refineries, and any disruption to this ecosystem could potentially shut down our transportation system…a terrible possibility for our economy. Our shale oil producers have greatly reduced this threat to our economy and to the markets.


In our opinion, recession risk is still the most significant threat to the markets and the single most important factor that we must always monitor. Currently the economic data has been consistent with a slowly growing economy…employment steadily growing, industrial production numbers positive, corporate profits growing again after the pause in 2016, housing sales still growing, car sales somewhat softer than recent years but still solid…nothing to indicate a slowdown in the economy.

“What an investor needs is the ability to correctly evaluate selected businesses. Note that word ‘selected’: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”

Warren Buffett


We always enjoy calls from clients and encourage you to let us know any time you have a question or concern. Please continue to keep us on our toes and let us know your thoughts.


Dave Crouch

Financial Advisor

Registered Principal

Aspen Grove Asset Management is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc., member FINRA / SIPC. Securities offered through Raymond James Financial Services, Inc.

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