Major Earnings Week, but does it matter?!
1/3 of the S&P 500 companies will report 2nd quarter earnings this week! Normally, this many earnings reports would sway markets one way or another. I don’t expect based on earnings reports alone that much movement will occur, but who knows!!! So far out of 79 S&P 500 companies reporting, 77% have exceeded their earnings consensus, although the bar has been lowered.
The topic of discussion has been and will continue to be whether the Fed will lower rates next week by .25% or .50%. Hours and hours will be spent on TV, the radio and on the internet debating and anticipating. I won’t waste much time unless new information appears because what do we know? The rate the Fed controls, the discount rate, will stay low for the foreseeable future, which by itself tends to be constructive for the stocks and bonds.
Fed/China to Keep the Markets Moving?
So how long has the China trade war been going on? Over 1 year and climbing! Do you see an end anytime soon? If you’re the President of China, knowing that President Trump is up for reelection in 15 ½ months, do you cut a permanent deal? I tend to think not! If Trump does not get reelected, the negotiations will probably take a different turn. Plus, as the President of China, you’re elected for life, so what’s the rush?!
My fear has been that this trade war would last significantly longer than most people anticipated. If we did get a China Trade resolution that made sense, the global equity markets would most likely respond positively, with bond yields (at least temporarily) heading higher.
For now however, it’s our Fed that will determine the markets’ next moves. The question is – how long can the Fed move the market forward without another catalyst? As always, time will tell!!
Markets Last Week
Last week witnessed US stock averages declining as the Dow was down (.61%), the S&P 500 lost (1.21%). The NASDAQ Composite dropped (1.18%) and the Russell 2000 (1.40%). International stock indexes fared a little better with the developed market MSCI EAFE Index down a mere (.13%) and the Emerging Market Stock Index gaining .76%.
Bonds as measured by the Barclay’s Aggregate Bond Index gained .38% and now up 6.13% for the year.
Question of the Week…
Qualified Charitable Contributions (Donations) have become very popular over the last year because of the limits to obtaining a tax deduction with a typical Charitable contribution. Which of the following are requirements to make a Qualified Charitable Contribution?
- Funds most come directly from your IRA only?
- You must be at least 70 ½ years of age?
- There is a $100,000 per person limit per year?
- There is no annual requirement?
- All of the Above?
Answer to last week’s question…!
What was the most profitable Company in the World in 2018?
- Royal Dutch Shell
- Saudi Aramco
- Exxon Mobile
The answer is #4 Saudi Aramco – with over 111 Billion in profits in 2018, almost double of Apple!!