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Weekly Economic Update - January 20, 2020

In this week’s recap: U.S. equity benchmarks hit fresh record highs; one trade deal is signed, and Congress approves another; builders break ground on more residential projects.

Weekly Economic Update

January 20, 2020

THE WEEK ON WALL STREET

Traders were in an upbeat mood last week, reacting to news out of Washington: the signing of the phase-one trade deal between the U.S. and China as well as the Senate passage of the U.S.-Mexico-Canada Agreement (USMCA). In addition, a new earnings season started. Risk appetite grew and spurred all three of the major Wall Street averages to record settlements on Friday.1

For the week, the Nasdaq Composite rose 2.29%; the S&P 500, 1.97%; the Dow Jones Industrial Average, 1.82%. International stocks improved 0.40%, according to MSCI’s EAFE index.2,3

Progress on the Trade Front

President Donald Trump and Chinese Vice Premier Liu He signed off on a new, partial U.S.-China trade pact Wednesday. In this deal, China agrees to buy at least $200 billion more of American products, crops, and energy futures over a 2-year period, and it must submit an “action plan” by mid-February, detailing how it will better protect American intellectual property and cut counterfeiting of American goods. The U.S. agrees to halve 15% tariffs on $120 billion of Chinese imports (other tariffs slated for last December were scrapped earlier as part of this agreement).

As for the USMCA, President Trump is expected to sign it into law this week. It was passed 89-10 in the Senate on Thursday, and by a wide margin in the House of Representatives in December. Mexico’s government has also approved the USMCA; Canada’s government has yet to do so.4,5 

Homebuilding Picks Up

The Census Bureau reported a 16.9% surge in housing starts in December. This surpassed expectations; housing market analysts, surveyed by Refinitiv, had expected no increase.1

What’s AHEAD

U.S. stock markets are closed Monday, in observance of Martin Luther King Jr. Day. Post offices and Social Security offices will also be closed Monday as well as most banks.

 

T I P   O F   T H E   W E E K

A retirement relocation to a cheaper metro area may cost you money in the short run, but you might see considerable long-term savings from such a move.  

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: December existing home sales figures from the National Association of Realtors.

Source: MarketWatch, January 17, 2020

The MarketWatch economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Capital One (COF), Netflix (NLFX), TD Ameritrade (AMTD), United Airlines (UAL)

Wednesday: Abbott Labs (ABT), Johnson & Johnson (JNJ), Texas Instruments (TXN)

Thursday: Comcast (CMCSA), Intel (INTC), Procter & Gamble (PG), Union Pacific (UNP)

Friday: American Express (AXP), Nextera Energy (NEE)

Source: Zacks, January 17, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Q U O T E   O F   T H E   W E E K

“A joyful life is an individual creation that cannot be copied from a recipe.”

Mihaly Csikszentmihalyi

 

T H E   W E E K L Y   R I D D L E 

Travel a mile, and I will change. Travel a million miles, and I might be incapable of further change. What am I?

LAST WEEK’S RIDDLE: I can be used to build castles, but I crumble in your hands. I can help a man see, and am found all around the lands. What am I?

ANSWER: Sand.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - foxbusiness.com/markets/us-stocks-jan-17-2020 [1/17/20]

2 - wsj.com/market-data [1/17/20]

3 - quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/17/20]

4 - cnbc.com/2020/01/15/trump-and-china-sign-phase-one-trade-agreement.html [1/16/20]

5 - washingtonpost.com/us-policy/2020/01/16/senate-approves-new-usmca-trade-deal-with-canada-mexico/ [1/16/20]

Weekly Economic Update - January 13, 2020

In this week’s recap: Stocks end up higher and oil ends up lower after an up-and-down week, as traders react to events in the Middle East and the data in the December unemployment report.

Weekly Economic Update

January 13, 2020

THE WEEK ON WALL STREET

The market had a choppy five days, with traders reacting to geopolitical developments and weaker-than-expected jobs data. Even so, the three major U.S. equity indices posted weekly gains and continued their strong start to the new year. During Friday’s trading session, the Dow Jones Industrial Average topped 29,000 for the first time.

Rising 1.75% for the week, the Nasdaq Composite outgained both the Dow (up 0.66%) and the S&P 500 (up 0.94%). The story for foreign stocks was different: the MSCI EAFE index declined 0.30%.1,2

  

Holiday Hiring Numbers

Wall Street was unimpressed by the latest jobs report from the Department of Labor. Employers added 145,000 net new workers in December; economists surveyed by Dow Jones had forecast a gain of 160,000. Wages grew less than 3% year-over-year for the first time in 17 months.

Unemployment remained at a 50-year low of 3.5%, however. The broader U-6 jobless rate, which also includes the underemployed, decreased to 6.7%, the lowest in 26 years of recordkeeping.3 

 

Oil Prices Decline

The rally in crude oil spurred by strained U.S.-Iran relations ebbed this past week. At Friday’s closing bell, WTI crude was worth $59.04 a barrel on the New York Mercantile Exchange, down 6.36% for the week and 3.31% year-to-date.4

 

What’s AHEAD

A new earnings season starts Tuesday, with big banks leading off and reporting fourth-quarter results. Chinese Vice Premier Liu He will be in Washington, D.C., through Wednesday, and during his visit, he and President Trump are expected to sign the phase-one trade deal between the U.S. and China.5

 

T I P   O F   T H E   W E E K

When it comes to naming an executor for your estate, a family member or relative is not your only option. You can also name an attorney or a corporate trustee as your executor.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The December Consumer Price Index, providing a look at inflation last month and for all of 2019.

Thursday: December retail sales figures from the Department of Commerce.

Friday: The University of Michigan’s preliminary January Consumer Sentiment Index, assessing consumer confidence levels from multiple angles.

Source: MarketWatch, January 10, 2020

The MarketWatch economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Citigroup (C), Delta Air Lines (DAL), JPMorgan Chase (JPM), Wells Fargo (WFC)

Wednesday: Bank of America (BAC), Goldman Sachs (GS), United Health (UNH), US Bancorp (USB)

Thursday: Morgan Stanley (MS)

Friday: Schlumberger (SLB)

Source: Zacks, January 10, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

Q U O T E   O F   T H E   W E E K

“The man who says he is willing to meet you halfway is usually a poor judge of distance.”

LAURENCE J. PETER

 

T H E   W E E K L Y   R I D D L E

I can be used to build castles, but I crumble in your hands. I can help a man see, and am found all around the lands. What am I?

 

LAST WEEK’S RIDDLE: A couple took a trip to the Arctic Circle, and they were disappointed that they did not see any penguins. What didn’t they realize about penguins?

ANSWER: They did not realize that almost all penguins live in the Southern Hemisphere.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - wsj.com/market-data [1/10/20]

2 - quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/10/20]

3 - cnbc.com/2020/01/10/us-nonfarm-payrolls-december-2019.html [1/10/20]

4 - marketwatch.com/investing/future/crude%20oil%20-%20electronic [12/3/20]

5 - cnbc.com/2020/01/09/chinas-vice-premier-liu-to-sign-us-trade-deal-in-washington-next-week.html [1/9/20]

 

Damian Rothermel is an investment adviser representative of, and securities and advisory services are offered through, USA Financial Securities Corp., Member FINRA/SIPC. www.finra.org A Registered Investment Adviser located at 6020 E. Fulton St., Ada, MI 49301. Rothermel Financial Services is not affiliated with USA Financial Securities.

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