Increased optimism of a Phase One trade deal between the U.S. and China helped to bring major averages higher in the holiday-shortened week, including a 100th new record high for the Dow Jones under the Trump Presidency. Aiding this optimism was China announcing increased penalties on violations of intellectual property rights. Data out of China showing industrial profits declining -9.9% in the last year may also lend to China’s desire to speed up this Phase One process. However, the human rights situation in Hong Kong could potentially jeopardize this progress. President Trump has signed into law Congressional legislation supporting Hong Kong’s anti-government protestors, prompting Beijing to say it would take ‘firm counter-measures’ and that attempts to interfere would be doomed to fail.
Sporting a comfortable lead in the poll ahead of the opposition Labour Party, Boris Johnson laid out his Tory agenda ahead of the December 12th In it he pledges to bring back his Brexit Deal to parliament before Christmas and ruled out any further delays. Johnson has also promised no new taxes, contrary to his opponent Jeremy Corbyn who has proposed additional taxes to fund a major expansion of the U.K.
Markets rose this week on continued optimism over trade. The S&P 500 gained 04% and closed at 3,141. The Dow Jones rose 0.75% and closed at 28,051. Year-to-date, the S&P is up 27.63% and the Dow Jones is up 23.05%.
Yields were little changed this week. The 5 year and 10 year U.S. Treasury Notes are yielding 63% and 1.78%, respectively.
The spot price of WTI Crude dipped this week. Prices fell 07% and closed at $55.42 per barrel. Year to date, Oil prices are up 22.04%.
The spot price of Gold rose by 55% and closed at $1,463.93 per ounce. Year to date, Gold prices are up 14.15%.
Initial jobless claims declined by 15,000 to 213,000 and the four-week moving average fell by 1,000 to 220,000. Claims decreased by 4,000 in Illinois and 3,000 in California but rose by 4,000 in Texas and 2,000 in New York.
Third Quarter real GDP was revised up by 0.2% to 2.1% in the BEA’s second estimate. This was above expectations but the details were softer as rising inventories contributed most of the upward revision.
New home sales declined by -0.7% in October, slightly better than expectations. New sales decreased in the South (-15,000) and Northeast (-6,000), but rose in the West (+13,000) and Midwest (+3,000).
The Case-Shiller home price index rose 0.4% for September, beating expectations of 0.3%. Prices rose in 17 of 20 cities with Seattle (+0.8%), Los Angeles (+0.7%) and Phoenix (+0.6%) posting the largest increases. Home prices have risen 2.1% over the last 12 months as measured by Case-Shiller.
Fact of the Week
The combined size of the world’s economies as measured by gross domestic product totals $106 trillion. The combined debt of the world’s economies is $255 trillion, or 240% of the worlds’s GDP. Debt includes government debt, household debt and borrowing by non-financial companies. (Source: Institute of International Finance)
On Monday, a 22-year-old Hong Kong student died after falling from a ledge of a car park during a police mission to clear an area during protests, sparking a new round of outrage against Beijing police. Reports say that the 22-year-old was trying to escape tear gas, however the exact reason for his fall are unclear. Additionally, a pro-Beijing lawmaker was stabbed in the street this week by someone impersonating a supporter. As of right now, police say that they were using tear gas to clear an area of protesters and deny any wrongdoing, but the death is creating outrage and a call for investigation by students at the city’s University of Science and Technology. Protests have become increasingly violent as Hong Kong continues to fight for Democracy with Chinese police, even after the controversial extradition bill was withdrawn in September.
Markets rose higher again this week. The S&P 500 gained 0.93% and closed at 3,093, an ALL TIME HIGH. The Dow Jones rose 1.37% and closed at 27,681. Year-to-date, the S&P is up 25.36% and the Dow Jones is up 20.98%.
Yields spiked this week amid China trade optimism. The 5 year and 10 year U.S. Treasury Notes are yielding 1.75% and 1.94%, respectively.
The spot price of WTI Crude rose this week. Prices rose 2.14% and closed at $57.40 per barrel. Year to date, Oil prices are up 26.40%.
The spot price of Gold fell by 3.68% and closed at $1,458.15 per ounce. Year to date, Gold prices are up 13.70%.
Initial jobless claims fell by 8,000 to 211,000 and the four-week moving average remained unchanged at 215,000. Claims rose by 2,000 in Illinois and fell by 3,000 in Michigan.
Factory orders fell by 0.6% versus expectations for a decline of 0.5%
The ISM non-manufacturing index rose by 2.1 points to 54.7 versus expectations for a reading of 53.5
The University of Michigan’s index of consumer sentiment rose by 0.2 points to 95.7 versus expectations for a reading of 95.5
Wholesale inventories fell by 0.4% versus expectations for a decline of 0.3%
Fact of the Week
37% of 2,003 Americans surveyed in the 1st quarter 2019 had less than $5,000 accumulated in pre-tax retirement accounts (source: Northwestern Mutual Planning & Progress Study).Please contact a member of the Wealth Management Department if you have any questions about this information.