Market Wrap Up

Week in Review

Good afternoon everyone. In case you missed it, here's what happened in the markets this week: A long time ago in a country called the U.S.A...Trade Wars.

What is happening and how did we get here? On the evening of May 5th President Trump surprised the markets be sending out the following tweet…

What’s important to remember is that tariffs are not a tax paid by foreign countries. Tariffs are a tax US businesses pay to the US government to import products from overseas. The reason these products are imported to begin with is because they can be found cheaper outside of our country. If U.S. companies have to start purchasing these products from companies at home it will lead to price increases. And if tariffs are paid for by U.S. businesses, the price increases are paid for by U.S. households. The cost to U.S. households from this newest round of tariffs is estimated to be $831 a year. That’s $831 less that families will have to spend annually. The decrease in value to all of the goods and services produced in the US is estimated to be $30 billion. This in and of itself would be enough to give any economist pause.

But the saga continues….

Not to be outdone…by himself…President Trump sent out the above tweet yesterday evening.

What does this mean for the future of not only the United States-Mexico-Canada Agreement but the trade war with China? Joel Naroff of Naroff Economic Advisors said it best, “If having an agreement doesn’t stop the U.S. from imposing tariffs on a country’s goods, why have an agreement at all?” Watching this unfold is almost like watching a football game where the referees only enforce rules half of the time.

The big question is, can the U.S. afford to not only fight, but win a two front trade battle? And, what will the long-term cost to the U.S. economy be?

chart (7).png

I wouldn’t be doing my job if I didn’t use this moment to highlight the benefits of having a diversified portfolio. Since the tariff increase announcement on March 5 the S&P 500 index has lost -5.32% while the 20+ Year US Treasury Bond Index is up +5.21%.

Marketwatch has more on this topic here.

Weekend Reading:

Trade Wars got you down? Maybe spend some time with Star Wars instead. Opening today, Star Wars Galaxy’s Edge is the newest fully immersive franchise experience to hit Disneyland’s theme park. Wired has a great article on Disneyland’s newest attraction: Star Wars Galaxy’s Edge and the Art of World Building

Can make it out to California for the grand opening? That’s okay. Here’s a list of everything coming to Netflix in June.

Have a great weekend everyone. We’ll see you next week!

*These are the general views of Stanton Burns and they should not be construed as investment advice for any individual. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Stanton Burns does not maintain positions in any securities mentioned as of the writing of this article. Past performance is historical and does not guarantee future results.

Market Wrap-Up: Week of 4/28/2019

Market Wrap-Up: Week of 4/28/2019

Markets Year-to-Date: DJIA: +14.93%/ S&P 500: +18.5%/ Nasdaq: +23.99%

Data Dump: Consumer confidence is up (+5 points), businesses are hiring, wages are moderately increasing (+2.9%), and unemployment has decreased to 3.6%.

Blurred Lines. The Federal Reserve met on Wednesday and decided not to make a change to their interest rate target (target remains at 2.25% to 2.50%). This sent the markets in to a tailspin with the S&P ending the day down -0.75%. Blame it on poor communication. The Feds statement after the meeting seemed to indicate the possibility of a rate cut as core inflation has declined and is now running below 2%. However, in Chairman Jerome Powell’s post-meeting press conference, he repeatedly stated that “the decline in core inflation is due to ‘transient’ factors”. Essentially, he does not see the decline in inflation continuing which supports his wait and see attitude towards interest rate changes.

The Fed’s job, and it’s autonomy, has not been made easy by President Trump, who continues to politicize monetary policy.

MARKET WRAP UP: WEEK OF 2/10/2019

MARKET WRAP UP: WEEK OF 2/10/2019

Good morning everyone. In case you missed it, here’s what happened in the markets this week. The threat of a government shutdown has subsided (not that the market ever cared). The Dow ended the week positive for the 8th consecutive week. And the threat of the U.S. and China NOT reaching a trade deal before the March 1 deadline (the date when the U.S. is set to increase tariffs on 2 billion in Chinese goods) has waned. President Trump indicated this week he’s open to moving back the deadline if it looks like progress is being made in trade negotiations. Even President Trump declaring a national emergency to build a border wall on Friday could do nothing to faze the markets.

Articles about U.S. and China trade dispute I’ve been reading: This article from Marketwatch discusses where discussions stand as of Friday. And here’s another from Bloomberg.

MARKET WRAP UP: GOVERNMENT SHUTDOWN EDITION

MARKET WRAP UP: GOVERNMENT SHUTDOWN EDITION

What do superheroes and online video streaming services have in common?

They both have movies nominated for Best Picture at the Oscar’s this year. Which, we’re only 30 days away from. That’s 5 days less than the U.S. Government Shutdown, which entered its 35th and final day on Friday. This week will also mark the fifth straight week of gains for the Dow.


Government shutdown by the numbers

  • 10.3% - The amount the S&P 500 has risen since the beginning of the shutdown.

  • 21 - The number of days the previous record holder lasted.

  • 0.13% - The estimated amount the shutdown lowered quarterly GDP growth per week.