In this week’s recap: the U.S. and China reach a phase-one trade deal, the Fed leaves the benchmark interest rate alone, and November retail sales come in below expectations.
Weekly Economic Update
Presented by William Mauro, December 16, 2019
THE WEEK ON WALL STREET
The U.S. and China announced a limited trade agreement last week. That news lifted U.S. and foreign stocks, leading to weekly gains.
Advancing 0.91% on the week, the Nasdaq Composite outperformed the S&P 500 (up 0.73%) and Dow Jones Industrial Average (up 0.43%). The MSCI EAFE index, measuring the performance of developed markets overseas, improved 0.42%.1,2
PHASE-ONE TRADE DEAL REACHED, DECEMBER TARIFFS AVERTED
Friday, White House and Chinese officials confirmed an agreement on what has been characterized as an initial step toward a larger trade pact. As a result of this phase-one deal, new U.S. tariffs (slated to go into effect on December 15) were canceled. The 15% tariffs (imposed on $110 billion of Chinese goods in September) now fall to 7.5%.
In return, China has committed to buying greater quantities of American crops, factory goods, and energy products.3
FED HOLDS STEADY ON SHORT-TERM INTEREST RATES
The last Federal Reserve meeting of the year brought no adjustment for the federal funds rate. The vote to leave short-term rates unchanged was unanimous.
After the meeting, Fed chair Jerome Powell told the media, “as long as incoming information about the economy remains broadly consistent with [our] outlook, the current stance of monetary policy will likely remain appropriate.†4
RETAIL SALES DISAPPOINT
Economists, surveyed by Bloomberg, expected a retail sales gain of 0.5% for November, but according to the Department of Commerce, the advance was only 0.2%. In a bright spot for analysts who wanted to see a strong start to the holiday shopping season, sales at online retailers rose 0.8% last month.5
Note: There will be no Weekly Economic Update next week, but we will be back on December 30 with a special “Year-in-Review†edition of the WEU. Have a happy holiday season!
T I P O F T H E W E E K
When you schedule home repairs or home improvements, double-check that the contractor you hire is licensed, fully bonded, and insured. If that is not the case, you could be assuming unnecessary risk during their visit.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: The Census Bureau offers a snapshot of November residential construction activity.
Thursday: A look at November existing home sales from the National Association of Realtors.
Friday: November personal spending data and the third estimate of third-quarter economic expansion from the federal government, plus the year’s final University of Michigan Consumer Sentiment Index (which measures consumer confidence levels).
Source: Econoday, December 13, 2019
The Econoday 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: FedEx (FDX)
Wednesday: General Mills (GIS), Micron Technologies (MU), Paychex (PAYX)
Thursday: Accenture (ACN), Nike (NKE)
Friday: CarMax (KMX)
Source: Zacks.com, December 13, 2019
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
“Nothing in the world is permanent, and we’re foolish when we ask anything to last, but surely we’re still more foolish not to take delight in it while we have it.â€
W. SOMERSET MAUGHAM
T H E W E E K L Y R I D D L E
The more places I be, the less you can see. What am I?
LAST WEEK’S RIDDLE: Suppose you have two twins, three triplets and four quadruplets. How many people do you have?
ANSWER: 9. Two twins are 2 people, three triplets are 3 people, and four quadruplets are 4 people. 2 + 3 + 4 = 9.
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 “NYSEâ€) 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 [12/13/19]
2 – quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [12/13/19]
3 – marketwatch.com/story/trump-announces-phase-one-china-trade-deal-and-scraps-dec-15-tariffs-2019-12-13 [12/13/19]
4 – bloomberg.com/news/articles/2019-12-11/fed-leaves-rates-unchanged-and-forecasts-show-no-change-in-2020 [12/11/19]
5 – bloomberg.com/news/articles/2019-12-13/u-s-retail-sales-miss-forecasts-for-pickup-as-restaurants-drop [12/13/19]
CHART CITATIONS:
wsj.com/market-data [12/13/19]
quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [12/13/19]
quotes.wsj.com/index/SPX/historical-prices [12/13/19]
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [12/13/19]
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [12/13/19]