Stock markets reduced January losses with an uptick to close the month. While stocks moved with oil prices for much of the month this is not usual. Most countries benefit from the low oil prices and only Russia is at risk of sovereign default if oil prices remain low as expected. The real danger for U.S. stock markets is the potential for further slowdown in China. The average of the U.S. major indices losses by the end of January was -4%. Indices average down -3.6% from a year ago.
Part of being human is wanting to know what is coming. The data suggests this January correction is not part of a big crash. Except for 1987 all 30% or greater corrections were part of a recession. There have been some 20-25% market drops without a recession. As of January 20th markets had dropped 13% from their peak in 2015. This year is expected to be volatile but not another crash like 2008. Our portfolios are diversified and prepared to weather this volatile time and recover well.
Flocks of robins have appeared – apparently from the snow covered land south of here. Trees are already running sap, weeks early. Last February is too strong a memory to give in to the temptation of thinking an early spring could be upon us. Still a mild week opening February is a gift, whatever follows.