Last December was terrible for stocks, as gains for the year turned into losses. Historically, however, December is the best month of the year for US equities, wiith gains averaging 1.6%. And when the S&P 500 is already up 20% or more by Thanksgiving, the index usually ends the year even higher, with an average gain between Black Friday and New Year’s Eve of 1.8%. Is this likely to prove true in 2019? Time will tell. What we do know is that through this November, the S&P was definitely up more than 20% (closer to 29%), a return that if maintained would make 2019 the second-best year for large-cap equities since 2004. Even though US corporate earnings have beaten expectations, it is surprising that equity markets have performed so well given the environment we find ourselves in: Economic fundamentals remain tepid at best and there’s certainly cooling in a number of key areas such as business confidence. Meanwhile, downside risks from Brexit and other geopolitical and economic events haven’t materially decreased. What is the cause of such exuberance? And will it last?

Find out in our December Flash Report.