In this week’s recap: U.S. equity benchmarks hit fresh record highs; one trade deal is signed, and Congress approves another; builders break ground on more residential projects.
Weekly Economic Update
Presented by John J. Barrios, CFP®, January 20, 2020
THE WEEK ON WALL STREET
Traders were in an upbeat mood last week, reacting to news out of Washington: the signing of the phase-one trade deal between the U.S. and China as well as the Senate passage of the U.S.-Mexico-Canada Agreement (USMCA). In addition, a new earnings season started. Risk appetite grew and spurred all three of the major Wall Street averages to record settlements on Friday.1
For the week, the Nasdaq Composite rose 2.29%; the S&P 500, 1.97%; the Dow Jones Industrial Average, 1.82%. International stocks improved 0.40%, according to MSCI’s EAFE index.2,3
Progress on the Trade Front
President Donald Trump and Chinese Vice Premier Liu He signed off on a new, partial U.S.-China trade pact Wednesday. In this deal, China agrees to buy at least $200 billion more of American products, crops, and energy futures over a 2-year period, and it must submit an “action plan” by mid-February, detailing how it will better protect American intellectual property and cut counterfeiting of American goods. The U.S. agrees to halve 15% tariffs on $120 billion of Chinese imports (other tariffs slated for last December were scrapped earlier as part of this agreement).
As for the USMCA, President Trump is expected to sign it into law this week. It was passed 89-10 in the Senate on Thursday, and by a wide margin in the House of Representatives in December. Mexico’s government has also approved the USMCA; Canada’s government has yet to do so.4,5
Homebuilding Picks Up
The Census Bureau reported a 16.9% surge in housing starts in December. This surpassed expectations; housing market analysts, surveyed by Refinitiv, had expected no increase.1
U.S. stock markets are closed Monday, in observance of Martin Luther King Jr. Day. Post offices and Social Security offices will also be closed Monday as well as most banks.
T I P O F T H E W E E K
A retirement relocation to a cheaper metro area may cost you money in the short run, but you might see considerable long-term savings from such a move.
THE WEEK AHEAD: KEY ECONOMIC DATA
Wednesday: December existing home sales figures from the National Association of Realtors.
Source: MarketWatch, January 17, 2020
The MarketWatch 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: Capital One (COF), Netflix (NLFX), TD Ameritrade (AMTD), United Airlines (UAL)
Wednesday: Abbott Labs (ABT), Johnson & Johnson (JNJ), Texas Instruments (TXN)
Thursday: Comcast (CMCSA), Intel (INTC), Procter & Gamble (PG), Union Pacific (UNP)
Friday: American Express (AXP), Nextera Energy (NEE)
Source: Zacks, January 17, 2020
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
“A joyful life is an individual creation that cannot be copied from a recipe.”
T H E W E E K L Y R I D D L E
Travel a mile, and I will change. Travel a million miles, and I might be incapable of further change. What am I?
LAST WEEK’S RIDDLE: I can be used to build castles, but I crumble in your hands. I can help a man see, and am found all around the lands. What am I?
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John Barrios is registered to offer securities through Woodbury Financial Services. Member FINRA & SIPC, and offer advisory services through First Heartland Consultants, Inc. Barrios Financial Services is not affiliated with First Heartland Capital, Inc.
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 “NYSE”) 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.
1 - foxbusiness.com/markets/us-stocks-jan-17-2020 [1/17/20]
2 - wsj.com/market-data [1/17/20]
3 - quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/17/20]
4 - cnbc.com/2020/01/15/trump-and-china-sign-phase-one-trade-agreement.html [1/16/20]
5 - washingtonpost.com/us-policy/2020/01/16/senate-approves-new-usmca-trade-deal-with-canada-mexico/ [1/16/20]