No surprise hear, that with the talk of a possible trade deal, markets continue to rise. For the week, the Dow Jones Industrial Average moved higher by 1.24%, the S&P 500 .94%. The Nasdaq Composite increased .77% however the small cap Russell 2000 took a small step back, down .10%.
Over the pond, stocks didn’t fare as well as the developed market MSCI EAFE Index rose .09% while the Emerging Market Stock Index fell (1.49%).
Bonds as measured by the Barclays Aggregate Bond Index rose in price by .54%. The 10 year US Treasury ending last week with a yield of 1.83% down from 1.94% the prior week.
Any guesses where the 10 Year Treasury will end 2019?!! A much bigger question is where the 10 year will end December 31, 2020!
So What If We Do Get A Trade Deal?
I certainly do not claim any expertise on Global Trade or its intricacies; however a few thoughts appear very possible….
If a trade deal is viewed as having constructive solutions that can be attained, I believe that businesses will quickly assess the situation to determine opportunities. Business will probably begin spending more capital, which can re-ignite the global economy for a bit. If the consumer continues to spend and business increase spending that should push the current economic expansion further into record territory. This does not necessarily mean the stock markets will follow because keep in mind… markets are usually a leading indicator! The markets will be on the watch for signs of inflation.
I continue to believe one of our biggest risks is that our Federal Reserve is more subservient to the stock market than is mandated. I simply cannot forget Powell saying in October of 2018 we are not even close to the end of the rate INCREASE cycle. That moved the S&P 500 down over 13% in the 4th quarter of 2018!!!! In the beginning of 2019, the Federal Reserve completely changed gears and began lowering rates as to sooth the markets and many who are pushing for lower and lower rates. Did I miss something? Did the economy start to falter? Did people stop going out to restaurants? At least lower rates will keep the interest you and I are paying on our 22 Trillion of National Debt at lower levels.
If we do not obtain a trade deal prior to the election, and Trump wins the re-election, I believe we could see a very quick end to the trade war, as China will have no choice but to negotiate a deal. I think several months ago, China believed Trump did not have any chance for re-election which is why they kept walking away from any deal. Many now think Trump has a good chance of re-election so China is more willing now the craft a partial deal.
Let’s face it, it’s hard not to re-elect and incumbent if the economy and markets are on an upswing!!!
Medicare Open Enrollment Reminder
For those on Medicare, if you have NOT re-shopped your Part D prescription drug plan, you have until the end of Medicare Open Enrollment Period, December 7, 2019. Many plans make several changes, and the only way you can be sure you plan is the most competitive for you is to re-shop! If you need guidance please do not hesitate to give us a call or email. Our office can provide guidance with your Medicare planning, and the importance of coordinating Medicare with your overall Retirement Income Plan!
Question of the Week…
How many calories does the average person consume on Thanksgiving Day?
** This is a WOW!!!; the average person consumes 229 grams of fat on Thanksgiving!!!!
Answer to last week’s question…!
The first Thanksgiving parade took place in Philadelphia in 1920. Which department store sponsored this parade?
- Montgomery Ward
- JC Penny’s
The correct answer is Gimbels, which sponsored the first Thanksgiving Day parade in 1920…. just over the bridge in Philadelphia!