Weekly Economic Update – September 16, 2019

Weekly Economic Update – September 16, 2019

In this week’s recap: the Dow logs an 8-day winning streak and Treasuries sell off as the mood brightens slightly in the U.S.-China trade dispute; yearly core inflation reaches a 13-month high.

Weekly Economic Update | Presented by Tim Flick | September 16, 2019

THE WEEK ON WALL STREET

Stocks edged toward all-time peaks during a relatively calm week marked by easing trade tensions. Friday marked the eighth straight daily advance for the Dow Jones Industrial Average.1

Small-cap shares, as tracked by the Russell 2000 index, rose 4.85% in five days. The S&P 500 improved 0.96% for the week, while the Dow and Nasdaq Composite respectively advanced 1.57% and 0.91%. Foreign shares added 1.22%, according to the MSCI EAFE index.2-4

 

A Delay for Planned October Tariff Hikes

Existing tariffs on $250 billion of Chinese imports were slated to rise from 25% to 30% on October 1, but the White House decided Thursday to postpone the increase until October 15, in a “gesture of good will” honoring a request from Chinese Vice Premier Liu He.

Bloomberg reported last week that some White House officials were considering an “interim” trade agreement that could pause some import taxes on Chinese products, so long as China agrees to buy specific U.S. crops and address intellectual property concerns.5 

 

More Risk Appetite

Last week’s conciliatory gestures between the U.S. and China influenced the bond market. By Friday’s close, the 10-year Treasury yield had climbed to 1.90%, up 0.35% for the week after a big selloff. (A rise in bond yields generally reflects a drop in bond prices.)6

 

Inflation Pressure Increases

Yearly core inflation reached a 13-month peak of 2.4% in August, according to the federal government’s Consumer Price Index. Core inflation (which excludes volatile food and fuel costs) has now increased for three straight months.7

 

WHAT’S NEXT

This week, traders await the Federal Reserve’s latest policy announcement. Whether the Fed chooses to cut short-term interest rate, any guidance in the statement will be highly scrutinized, as Wall Street is eager to discern any hints about whether the Fed is prepared to continue cutting short-term rates.

T I P   O F   T H E   W E E K

Smart small-business owners hire a bookkeeper soon after launching their companies. Organized books can point out whether a business is successful and identify the areas in which it can improve.

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: The Federal Reserve’s policy announcement is scheduled for 2:00pm EST, and Fed chair Jerome Powell is slated to address the media at a subsequent press conference.

Thursday: The National Association of Realtors issues its August existing home sales report.

Source: Econoday / Federal Reserve, September 13, 2019

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 release of data may be delayed without notice for a variety of reasons.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Adobe (ADBE), FedEx (FDX)

Wednesday: General Mills (GIS)

Thursday: Darden Restaurants (DRI)

Source: Zacks, September 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.

 

Q U O T E  O F  T H E  W E E K

“You cannot shake hands with a clenched fist.”

INDIRA GHANDI

T H E   W E E K L Y   R I D D L E

What has hundreds or thousands of ears, but can’t hear a thing?

 

LAST WEEK’S RIDDLE: It is not alive, it cannot see, yet it has an eye and it can make you gasp or cry, if you are not careful. What might it be?

ANSWER: A needle.

Tim Flick may be reached at 317-947-7047 or tflick@cornerfi.com www.cornerfi.com

Know someone who could use information like this?
Please feel free send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Cambridge and Cornerstone Financial Advisory are not affiliated. This message distributed via use of the MarketingPro system.

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. 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.

CITATIONS:

1 – cnbc.com/2019/09/13/stock-markets-dow-sp-500-close-to-all-time-highs-on-wall-street.html [9/13/19]   

2 – money.cnn.com/data/markets/russell/ [9/13/19]   

3 – wsj.com/market-data [9/13/19]   

4 – quotes.wsj.com/index/XX/990300/historical-prices [9/13/19]

5 – tinyurl.com/y2obyd4e [9/12/19]

6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [9/13/19]

7 – investing.com/economic-calendar/core-cpi-736 [9/12/19]

 

CHART CITATIONS:

wsj.com/market-data [9/13/19]   

quotes.wsj.com/index/SPX/historical-prices [9/13/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2019 [9/13/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [9/13/19]

Weekly Economic Update – September 16, 2019

Weekly Economic Update – August 26, 2019

In this week’s recap: China unveils new tariffs, the U.S. responds in kind, Jerome Powell speaks at Jackson Hole, leading economic indicators rise, and stocks fall.

Weekly Economic Update | Presented by Tim Flick | August 26, 2019

THE WEEK ON WALL STREET

Traders assumed that the week’s biggest news event would be Federal Reserve Chairman Jerome Powell’s speech at the annual Jackson Hole banking conference. Instead, China seized the headlines by announcing new tariffs on U.S. goods.

Domestic stocks ended up lower for the week. The Nasdaq Composite fell 1.83%; the S&P 500, 1.44%; the Dow Jones Industrial Average, 0.99%. International stocks posted a weekly gain: the MSCI EAFE benchmark rose 0.96%.1,2

  

Beijing Plans New Tariffs

Friday morning, China’s finance ministry stated it would levy import taxes of 5-10% on an additional $75 billion of American imports. One set of tariffs is slated to start September 1, targeting U.S. crops, meats, and seafood. A second set, effective December 15, will put tariffs on U.S.-made cars and car parts. In total, these taxes are scheduled for more than 5,000 American products.

Friday evening, the White House announced two rounds of 5% increases on existing U.S. tariffs on Chinese goods, to be successively implemented on September 1 and October 1.3,4 

 

Powell Reflects at Jackson Hole

Friday, Jerome Powell delivered an address on monetary policy at the Kansas City Fed’s annual Jackson Hole symposium. He noted that the global economy currently presented a “complex, turbulent picture,” and added that the Fed was “carefully watching developments” and would “act as appropriate.”

Investors wonder if, at its September meeting, the central bank will consider another rate cut. Comments from other Fed officials at Jackson Hole did not indicate a consensus on that matter.5

  

Leading Indicators Rise

The Conference Board, the business research group known for its monthly Consumer Confidence Index, also publishes a monthly Leading Economic Indicator (LEI) Index. The Conference Board’s LEI provides a forward-looking analysis of the health of the business cycle, looking at ten factors ranging from consumer expectations to stock prices to construction activity.

In July, the LEI rose 0.5%, following 0.1% descents in May and June. This sudden increase offers optimism at a time when investors are wondering about the momentum of the economy.6

 

FINAL THOUGHT

Bond prices have risen around the world, leading to lower bond yields. In some instances, yields have turned negative. While the yield on the 10-year Treasury has also declined, it is still above 1.5%, notably exceeding the yields of similar-duration bonds in France, Germany, Spain, and the United Kingdom.7

T I P   O F   T H E   W E E K

Remember that you must itemize to claim a federal tax deduction for charitable contributions. It is to your advantage to itemize when your total individual deductions exceed the standard deduction amount for your federal tax filing status.

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The Conference Board’s July Consumer Confidence Index.

Thursday: The Bureau of Economic Analysis presents the second estimate of second-quarter economic growth, and the National Association of Realtors publishes new data on pending home sales.

Friday: July consumer spending data from the Department of Commerce, and July’s final University of Michigan Consumer Sentiment Index (a gauge of consumer confidence levels).

Source: Econoday / MarketWatch Calendar, August 23, 2019

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 release of data may be delayed without notice for a variety of reasons.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Autodesk (ADSK)

Thursday: Abercrombie & Fitch (ABF), Best Buy (BBS), Lululemon Athletica (LULU).

Source: Zacks, August 23, 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.

 

 

Q U O T E  O F  T H E  W E E K

“Whether it’s the best of times or the worst of times, it’s the only time we’ve got.”

ART BUCHWALD

T H E   W E E K L Y   R I D D L E

A crook steals $100 from a cash register. The crook returns an hour later with the same $100 and buys $70 in items, receiving $30 in change. How much does the merchant lose?

 

LAST WEEK’S RIDDLE: Without fingers, I point; without arms, I strike; without feet, I run. What am I?

ANSWER: A clock.

Tim Flick may be reached at 317-947-7047 or tflick@cornerfi.com www.cornerfi.com

Know someone who could use information like this?
Please feel free send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Cambridge and Cornerstone Financial Advisory are not affiliated. This message distributed via use of the MarketingPro system.

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. 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.

CITATIONS:

1 – wsj.com/market-data [8/23/19]

2 – quotes.wsj.com/index/XX/990300/historical-prices [8/23/19]

3 – cnn.com/2019/08/23/business/china-tariff-products-soybeans-oil/index.html [8/23/19]

4 – marketwatch.com/story/trump-says-us-tariffs-will-increase-on-chinese-goods-2019-08-23 [8/23/19]

5 – marketwatch.com/story/powell-says-fed-carefully-watching-developments-and-will-act-as-appropriate-2019-08-23-10103027 [8/23/19]

6 – conference-board.org/data/bcicountry.cfm?cid=1 [8/22/19]

7 – cnbc.com/2019/08/20/investing-in-the-strange-negative-yield-world-its-very-hard-to-wrap-your-arms-around.html [8/20/19]

 

CHART CITATIONS:

wsj.com/market-data [8/23/19]

quotes.wsj.com/index/SPX/historical-prices [8/23/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [8/23/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [8/23/19]

Impact Investing

 Planning to grow your money with causes in mind.

Provided by:  Tim Flick, CFP®

 

Can investing change the world? Some millennials, Gen Xers, baby boomers and elders hope the answer is “yes.” Billionaires, like Bill Gates and Richard Branson, are pouring money into green business ventures and projects intended to improve education and the quality of life, and millions of other households are directing portions of their portfolios into socially responsible investments. Impact investing, which was once largely ignored by Wall Street, has gone mainstream.

Ethical investing has evolved since the 1960s. At first, it was about not investing in certain companies – such as firms that effectively profited from South Africa’s policy of apartheid, and corporations whose products were environmentally destructive or morally objectionable.

During the 1990s, the goal of simply screening portfolio choices gave way to a new focus on making socially responsible investments. A new sector of investment products emerged, created with the dual purpose of effecting positive change and generating significant yields. In 2005, there were about 200 such investment vehicles; less than a decade later, investors could choose from nearly 1,000.1

A generation ago, socially responsible investments had their share of critics. Couldn’t their money managers see that corporate profits came first, and environmental stewardship, second? Surely these investment vehicles were destined for substandard returns.

Looking at the performance of two key benchmarks, it appears those critics were wrong.

Impact investments actually outgained the S&P 500 during a 25-year period. From 1990 through 2014, the Domini 400 – the benchmark index for the socially responsible investment sector – yielded an average yearly total return of 10.46%. The S&P’s average annual total return across the same time frame was 9.93%.2

Public opinion can affect corporate profits. Firms built around the manufacturing or distribution of tobacco, alcohol, opioids, and weapons can garner some bad press, and, if it is sustained, that tarnishes their brand. A scandal can quickly affect their share prices. By comparison, companies that seek to make a “green” mark on the world may receive more favorable press coverage – and, as more and more world leaders, media outlets, and investors see a need for sustainability, the better impact investing looks.

Few investors will find a “perfect” socially responsible investment product. Typically, these investments own shares of hundreds of different companies, and some of those firms may be socially responsible to varying degrees. Pooled assets from retail investors may be directed into shares of a big bank, a major plastics manufacturer, a company with a distinct stand on some divisive issue, or purveyors of largely unhealthy fast food – indeed, there are environmentally and socially responsible companies that also have these characteristics.3

Even so, more and more investors have embraced these portfolio options. Right now, about one out of every sixth invested dollar in America is held in an investment vehicle managed according to a socially responsible investment strategy.4

Everyone wants to invest in congruity with their values. That propensity attracts people to ethical investment options. The fact that their average yearly total returns have been up to par has only led more people to consider them.

Tim Flick may be reached at 317-947-7047 or tflick@cornerfi.com.

www.cornerfi.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. 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. 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 indices are unmanaged and are not illustrative of any particular investment.

 

«RepresentativeDisclosure» 

Citations.
1 – tinyurl.com/jd24ehu [2/28/16]
2 – marketwatch.com/story/socially-responsible-investing-has-beaten-the-sp-500-for-decades-2015-05-21 [5/26/15]
3 – tinyurl.com/z97as9z [6/19/16]
4 – wisebread.com/a-simple-guide-to-socially-responsible-investing [5/25/16]