Hail to the Chief
On Monday, we celebrated President’s Day as a salute to all Presidents of the United States…although the history of the Presidents Day date begins in 1800. Following the death of George Washington in 1799, his February 22 birthday became a perennial day of remembrance. At the time, Washington was venerated as the most important figure in American history, and events like the 1832 centennial of his birth and the start of construction of the Washington Monument in 1848 were cause for national celebration. While Washington’s Birthday was an unofficial observance for most of the 1800s, it was not until the late 1870s that it became a federal holiday. Senator Steven Wallace Dorsey of Arkansas was the first to propose the measure, and in 1879 President Rutherford B. Hayes signed it into law. The holiday initially only applied to the District of Columbia, but in 1885 it was expanded to the whole country. At the time, Washington’s Birthday joined four other nationally recognized federal bank holidays—Christmas Day, New Year’s Day, the Fourth of July and Thanksgiving—and was the first to celebrate the life of an individual American. Martin Luther King Jr. Day, signed into law in 1983, was the second.
Uniform Monday Holiday Act. The shift from Washington’s Birthday to Presidents Day began in the late 1960s, when Congress proposed a measure known as the Uniform Monday Holiday Act. Championed by Senator Robert McClory of Illinois, this law sought to shift the celebration of several federal holidays from specific dates to a series of predetermined Mondays. In the 1960’s and 1970’s our Pavik Family lived just outside of Chicago, IL, and by celebrating both Washington’s (national) and Lincoln’s (Illinois) birthdays separately, we had the potential for two non-school days in February. The Uniform Monday Holiday Act was passed into law in 1968, but not effectively complied with until President Nixon signed this law into effect in 1971 by executive order…after which we celebrated both birthdays on the third Monday in the month. The premise of the law was that it increased worker efficiencies/productivity with a 3 day weekend (vs. the truancy associated with any mid-week holiday), and added a retail holiday for the after-Christmas holiday season to spur on a seasonally lagging first quarter retail sales.
Did you know? President's Day never falls on the actual birthday of any American president. Four chief executives—George Washington, William Henry Harrison, Abraham Lincoln and Ronald Reagan—were born in February, but their birthdays all come either too early or late to coincide with Presidents Day, which is always celebrated on the third Monday of the month.
China: The Year of the Pig. The Chinese New Year started earlier this month (one of my sons lives and works in Beijing, and he found these New Year celebrations exciting/memorable); and with it came the Year of the Pig. Let us stress that we would never suggest to invest purely based on the signs of the zodiac, but it is also worth pointing out that out of the 12 zodiac signs, stocks have done the best during the Year of the Pig .
First Quarter Seasonality…Even with President’s Day…Expect a contraction in real gross domestic product (RGDP) in the first quarter of 2019. Don't worry, it happens almost every year. Harsh winter weather and lower post-holiday spending are two of the causes. Economists typically seasonally adjust this 1st quarter data to make it more useful for policymakers.* (*Source: St. Louis Federal Reserve, On the Economy Blog. US Economy Contracting in Q1? Happens Almost Every Year.)
Dow Jones Transportation Index. One category of stocks that has stood out in the after-Christmas stock market rebound, however, is also a category that is often viewed as a barometer of the overall health of the economy: transportation stocks. Dow Jones Transportation Average has soared nearly 20% from its Christmas Eve low (Zack’s Research). Companies within the transportation sector are largely responsible for moving resources and capital around the country, and the world. Think airlines, railroads, and shipping companies. The more freight and capital being shipped and moved around the country and the world, the more economic activity that’s likely to follow. Transportation stocks may have outperformed as a reflection of real underlying economic strength, but investors may also be pricing in the likelihood of a US-China trade resolution with resultant increased trade. (1)
Have a brilliant and Blessed Week!