The Year in Review

The Weekly Update

Week of December 20th, 2019
By Christopher T. Much, CFP®, AIF®

What Drove the Markets?
Four factors influenced investment performance in 2019: a shift in U.S. monetary policy, the ongoing trade dispute between the U.S. and China, earnings, and the economy.

Stocks reached record highs in 2019. The S&P 500 climbed above 3,000 for the first time. The benchmark ended Friday’s trading session up 29.25% for the year. At Friday’s close, the Dow Jones Industrial Average showed a year-to-date advance of 22.95%, while the Nasdaq Composite was up 35.74% YTD. The MSCI EAFE index, representing foreign stocks, was up 18.10% YTD through December 27.

The Federal Reserve Eased
The central bank made three quarter-point cuts to the benchmark short-term interest rate in 2019. That was a change from 2018, when the Fed worked on normalizing monetary policy with interest rate increases, while thinning its large bond portfolio.

By and large, investors welcomed the policy shift. At the end of 2018, there were concerns that the Fed’s effort to tighten the money supply had backfired, with higher U.S. interest rates impeding both the domestic and global economy.

The U.S. and China Trade Quarrel Cooled Down Slightly
In December, representatives from both nations agreed on a “phase-one” trade deal after a year-and-a-half of imposing tariffs on each other’s products. This pact, which is expected to be signed in 2020, is characterized as an initial step toward a larger deal.

In May, the U.S. put 25% tariffs on $200 billion of Chinese imports; a month later, China imposed a 25% import tax on $60 billion of U.S.-made goods reaching its shores. These tariffs may be reduced or removed as part of the phase-one deal. (Another $120 billion worth of Chinese goods are currently under a 7.5% tariff, reduced from 15% by the new agreement.)

Earnings Beat (Low) Expectations
Stock market analysts were pessimistic about corporate profits as the year began. With economies worldwide slowing down in 2018, year-over-year earnings growth for S&P 500 firms seemed poised to decelerate.

Deceleration was evident, but later in the year, many firms managed to exceed reduced estimates. According to stock market analytics firm FactSet, 75% of S&P 500 components beat earnings-per-share estimates in Q3, compared to a 5-year historical average of 72%.

The Economy Maintained Momentum
Gross domestic product came in at 3.1% in Q1, 2.0% in Q2, and 2.1% in Q3. Through November, nonfarm payrolls growth had averaged 180,000 per month during 2019. Manufacturing output varied, as CEOs were less certain about expansion and capital investments in the first half of the year; it declined in Q1 and Q2 before improving again in Q3.

The Conference Board’s consumer confidence index was at 125.5 in November, above its (revised) January mark of 121.7. Inflation stayed under 2% for most of the year before reaching a 12-month high of 2.1% in November.

What’s Ahead
Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act before Christmas, and President Trump signed it into law last week. This new law alters a key rule pertaining to traditional retirement accounts. It raises the age for Required Minimum Distributions (RMDs) from these accounts, from 70½ to 72. (If you are now 70½ or older, this change does not affect your scheduled RMDs. Only those who turn 70½ in 2020 or later are subject to the new rule.)

THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: The Conference Board publishes its last monthly Consumer Confidence Index of 2019.
Friday: The Institute for Supply Management presents its December manufacturing index, a gauge of U.S. factory activity.

Source: Econoday, December 27, 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.
Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.wsj.com/market-data
https://quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices
https://www.washingtonpost.com/business/2019/12/11/year-federal-reserve-admitted-it-was-wrong/
https://www.bbc.com/news/business-45899310
https://insight.factset.com/earnings-insight-q319-by-the-numbers-infographic
https://www.marketwatch.com/tools/calendars/economic
https://www.bls.gov/iag/tgs/iag31-33.htmhttps://www.investing.com/economic-calendar/cb-consumer-confidence-48
https://tradingeconomics.com/united-states/inflation-cpi
https://www.marketwatch.com/story/with-president-trumps-signature-the-secure-act-is-passed-here-are-the-most-important-things-to-know-2019-12-21
The Year in Review2019-12-30T12:15:35-05:00

Started in Chicago

Started in Chicago

Every year, Chicago further strengthens its position as a business and tech hub, serving as home base to many fantastic young companies and well-known, industry powerhouses. Watch our latest presentation that takes a look at some big Chicago companies that started small, and small companies ready to do big things, along with the ecosystem of launch pads that are empowering the next generation of entrepreneurs. http://bit.ly/36NtAiV

Started in Chicago2019-12-20T13:59:47-05:00

Phase-One Trade Deal Reached

The Weekly Update

Week of December 16th, 2019
By Christopher T. Much, CFP®, AIF®

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%.

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 commits to buy greater quantities of American crops, factory goods, and energy products.

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.”

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.

Note: There will be no Weekly Market Update next week, but we will be back on December 30 with a special “Year-in-Review” edition of the WMU. Have a happy holiday season!

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, 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.
Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.wsj.com/market-data
https://quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices
https://www.marketwatch.com/story/trump-announces-phase-one-china-trade-deal-and-scraps-dec-15-tariffs-2019-12-13
https://www.bloomberg.com/news/articles/2019-12-11/fed-leaves-rates-unchanged-and-forecasts-show-no-change-in-2020
https://www.bloomberg.com/news/articles/2019-12-13/u-s-retail-sales-miss-forecasts-for-pickup-as-restaurants-drop
Phase-One Trade Deal Reached2019-12-16T13:31:24-05:00

Estate Strategies – Critical Elements of an Estate Plan

Estate Strategies – Critical Elements of an Estate Plan

Taking steps to help protect your estate is an important financial choice. With proper strategies, you may be able to maximize your opportunities and help manage stress and confusion for your loved ones. Take a look at some important details to address when creating your own estate plan in our new piece. http://bit.ly/354S5aW

Estate Strategies – Critical Elements of an Estate Plan2019-12-12T10:06:31-05:00

Stocks Ride Out a Choppy Week

The Weekly Update

Week of December 9th, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
Key Wall Street benchmarks were up and down last week – or rather down and then up. A Tuesday retreat was offset by a Friday rally spurred by the Department of Labor’s November jobs report.

While the S&P 500 managed to rise 0.16% for the week, the Dow Jones Industrial Average declined 0.13%, and the Nasdaq Composite ceded 0.10%. MSCI’s EAFE benchmark for international stocks retreated 0.25%.

Hiring Surpasses Expectations
Employers added 266,000 net new jobs last month, 79,000 more than economists surveyed by Dow Jones had projected. The main jobless rate ticked down 0.1% to 3.5%. The U-6 rate, counting both the unemployed and underemployed, also declined 0.1% to 6.9%. Wages grew 3.1% year-over-year, above the 3.0% Dow Jones estimate.

These numbers do not indicate an economy cooling off. While they were influenced by the return of striking General Motors workers to their jobs, November hiring gains were spread across several categories.

Markets Might Wait Well into 2020 for a China Trade Deal
The U.S.-China trade dispute has gone on for 21 months. Wall Street would like to see a new phase-one trade agreement signed this month, but the timeline could lengthen. On Tuesday, President Trump said that he was considering the option of waiting until after the 2020 election to sign off on such a pact.

On December 15, the U.S. is slated to impose a new set of tariffs on around $160 billion of Chinese products. Tech companies are eyeing this date with concern.

Final Thought
Holiday shopping is critical to the economy, accounting for about 20% of annual retail sales. This year’s calendar, however, does not favor retailers. The 2019 holiday shopping season is six days shorter than last year’s, as Thanksgiving fell on November 28. So, expect traders to keep close tabs on the pace of holiday spending, even with consumer confidence indices and stock benchmarks at high levels.

THE WEEK AHEAD: KEY ECONOMIC DATA
Wednesday: The Federal Reserve makes its latest monetary policy statement, followed by a press conference featuring Fed Chairman Jerome Powell; also, the November Consumer Price Index appears.
Thursday: The Department of Commerce releases its November retail sales report.

Source: Econoday, December 6, 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: AutoZone (AZO)
Wednesday: Lululemon Athletica (LULU)
Thursday: Adobe Systems (ADBE), Broadcom (AVGO), Costco (COST)

Source: Zacks, December 6, 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.
Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.wsj.com/market-data
https://quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices
https://www.cnbc.com/2019/12/06/us-nonfarm-payrolls-november-2019.html
https://www.washingtonpost.com/us-policy/2019/12/03/trump-says-trade-deal-with-china-could-wait-until-after-election/
https://www.jsonline.com/story/money/2019/11/26/black-friday-tv-sales-deals-best-buy-target-walmart-kohls-still-good/4254241002/
Stocks Ride Out a Choppy Week2019-12-09T13:34:17-05:00

November Concludes with Gains

The Weekly Update

Week of December 2nd, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
As November wrapped up, U.S. equity benchmarks advanced. Stocks were again aided by a sense of optimism that a preliminary U.S.-China trade deal could be near.

For the week, the Nasdaq Composite added 1.87%; the S&P 500, 1.21%; the Dow Jones Industrial Average, 1.03%. The MSCI EAFE index, which measures the performance of developed stock markets outside North America, gained 0.89%.

Markets Wait for News of a Trade Pact
Wednesday, a senior White House official told Politico that the U.S. was “millimeters away” from a phase-one trade agreement with China, a deal that might involve the removal of certain tariffs.

Still, friction remains within the Sino-American relationship. Last week, President Trump signed two bills into law backing pro-democracy demonstrators in Hong Kong. China’s Ministry of Foreign Affairs quickly reacted, stating that American lawmakers had “sinister intentions” and adding that China would take “strong counter-measures” in return.

The Latest on Consumer Spending and Consumer Confidence
Personal spending was up 0.3% in October, according to the Department of Commerce. This happened even with no gain in household incomes.

The Conference Board said its Consumer Confidence Index came in at 125.5 for November. Even though it has declined for four straight months, the index remains well above levels seen during the first half of the decade.

THE WEEK AHEAD: KEY ECONOMIC DATA
Monday: The Institute for Supply Management provides its latest monthly index of U.S. manufacturing activity (November).
Wednesday: The ISM presents its November Non-Manufacturing Index, and Automatic Data Processing (ADP) publishes its November payrolls report.
Friday: November hiring data arrives from the Department of Labor, and the University of Michigan’s preliminary December Consumer Sentiment Index appears.

Source: Econoday, November 29, 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: Salesforce (CRM), Workday (WDAY)
Wednesday: RBC (RY)
Thursday: Dollar General (DG), TD Bank (TD)

Source: Zacks, November 29, 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.
Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.wsj.com/market-data
https://quotes.wsj.com/index/XX/990300/historical-prices
https://www.politico.com/news/2019/11/27/us-trade-deal-china-074230
https://www.cnbc.com/2019/11/29/dow-futures-black-friday-thanksgiving-holiday.html
https://www.morningstar.com/news/dow-jones/201911276898/us-gdp-growth-revised-up-to-21-rate-in-third-quarter-2nd-update
https://www.briefing.com/calendars/economic/display-article?ArticleId=ER20191126100000ConsumerConfidence&FileName=conf.htm
November Concludes with Gains2019-12-02T13:43:09-05:00