– Investment strategist Craig Fehr offers chamber his predictions –
There are three signals to watch when pondering how investments are faring and what the future holds for the stock market – the economy, corporate profits and interest rates.
“Get those three signals right and you can guess pretty accurately what’s going to happen,” says Craig Fehr, investment strategies principal for Edward Jones Investments.
Fehr spoke at the Lake Houston Chamber’s annual Economic Outlook Feb. 25 at the Clubs of Kingwood.
“On average, we’ve seen 2% growth for the last 10 years,” Fehr said, “and that’s a good thing. We’re keeping it steady. It’s a slow, steady economy that isn’t overheating.”
Fehr is a natural to discuss the economy, investments and the stock market. He made his first “investment” when he was 8 years old.
“I was willed $200 from my great-grandmother when she died, so I went to my grandfather and asked him what I should do. He told me to buy a cow,” Fehr explained.
He did just that and doubled his investment two months later when he sold his cow. Today, Fehr analyzes and interprets economic trends and market conditions for Edward Jones and helps investors build and maintain financial portfolios that will meet their goals. He’s a co-host on Bloomberg Television and is regularly quoted in several publications including Barron’s, Wall Street Journal, Financial Times, Yahoo, Reuters and CNBC.
His television and interview experience showed as the St. Louis native drew an analogy between his own beloved Cardinals and the Houston Astros.
“My 10-year-old son and I were talking about the ‘sign stealing’ and I was surprised when my son said, ‘Dad, what difference does it make if the players knew the signs? They still had to hit the ball,’” Fehr said.
“Investing and watching the stock market is a lot like what my son was talking about,” Fehr explained. “We have tons of information – or signals – to help us make decisions but we still have to make the pitch and hit the ball.”
Among the “tons of information” that is available, Fehr gave an historical perspective, describing the United States economy since the 1950s.
“The 1950s were post war and new industrial revolution, while the 1960s saw the rise of consumerism, war and recession,” he said. “Inflation was the word in the 1970s, while the ‘80s saw the rise of the consumer again; the ‘90s were the beginning of the internet and high productivity.”
The 2000s were tainted with “9/11,” war and recession again, while the last decade, Fehr said, has been slow and steady growth and low interest rates.
“This bull market has been a pretty steady run but how long will it continue and what are the signals?” Fehr asked.
While the recent coronavirus pandemic and the upcoming election are on most investors’ minds, Fehr emphasized that “… most of America’s economic horsepower – 70% – comes from us. With our attitude about things, we really get to decide our own fate.”
“Recessions occur at around 4-5% growth rate but our rate is around 2%,” Fehr said. “So, let’s look at those three signals I mentioned at the beginning: The economy is growing at a sustainable 2%. Corporate profits are healthy. Interest rates are low. The signals tell us our foundation looks good.”
Fehr believes the coronavirus is “… a big deal for China …” but for the last 18 months, corporations have been moving their supply chains to other countries and while some may not be able to get some of the goods that they’d like, this will be a temporary issue.
In answer to a question about the new United States-Mexico-Canada – USMCA – trade agreement, Fehr said the old NAFTA treaty needed to be updated and that this new agreement made some “tweaks.”
“At this point, USMCA will mostly affect car sales,” he explained. “It requires more auto parts to be made where the cars are assembled, so costs will rise and cars will get more expensive.”
Texas State Rep. Dan Huberty will speak March 17 at the chamber luncheon at the Humble Civic Center honoring Teachers of the Year from Lake Houston’s public and private schools and Lone Star College. Huberty is chair of the House Committee on Public Education and the champion for several important pieces of legislation relating to public education. The chamber also will honor Dr. Katherine Persson, who will retire soon as president of Lone Star College-Kingwood. Persson is being saluted for her “… lifetime dedication to helping Lake Houston students reach new heights through education.” To register for the luncheon, visit lakehouston.org.