Hixon Zuercher Capital Management
Fee-only Registered Investment Advisor in Findlay, Ohio 45840
In the spirit of celebrating Ground Hog’s Day earlier this month, I decided to call on the true experts to help me discuss the major economic headlines from last month, and also talk about how they could have an effect on you as an investor.
As always, if you have any questions about your portfolio after viewing this video, please don’t hesitate to give us a call at (419) 425-2400, or send us an email at hello@hzcapital.com. We would be happy to chat with you!
The Week on Wall Street
Stocks advanced four days out of five during the past market week, erasing the losses of the week before.
The Nasdaq Composite surged 4.04%, the S&P 500 3.17%, and the Dow Jones Industrial Average 3.00%. Foreign stocks also rallied: the MSCI EAFE index added 2.21%.
China Plans to Halve Some Tariffs
Thursday, investors woke up to the news that China would be lowering import taxes on about $75 billion of U.S. products. Later this week, a set of 10% tariffs is slated to drop to 5%, and a group of 5% tariffs is scheduled to fall to 2.5%.
This reduction is part of the phase-one trade deal that China agreed to last month, a pact which may be a step toward a trade truce with the U.S.
January’s Net Job Gain: 225,000
The Department of Labor’s latest employment report exceeded expectations. Economists surveyed by Bloomberg projected 165,000 net new hires last month. The main jobless rate ticked north to 3.6%; the U-6 rate including the underemployed rose 0.2% to 6.9%.
This upside surprise points to ongoing strength in the economy. Stocks declined Friday after the report’s release, however, as traders viewing the data saw less reason for a Federal Reserve rate cut in the near future.
A Manufacturing Positive
The U.S. factory sector grew last month, for the first time since July. The Institute for Supply Management’s purchasing managers index for the manufacturing sector, which traders view as a fundamental economic indicator, came in at 50.9 in January; any reading above 50 indicates sector expansion.
What’s Ahead
Investors should note that U.S. stock and bond markets will be closed on Monday, February 17 for Presidents Day.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Federal Reserve chairman Jerome Powell begins two days of testimony in Congress on U.S. monetary policy.
Thursday: The federal government’s January Consumer Price Index, measuring monthly and yearly inflation.
Friday: January retail sales data from the Census Bureau, and the University of Michigan’s preliminary February consumer sentiment index, an evaluation of consumer confidence levels.
Source: MarketWatch, February 7, 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
Monday: Allergan (AGN), RingCentral (RNG)
Tuesday: Exelon (EXC), Hilton Worldwide Holdings (HLT)
Wednesday: CME Group (CME), Cisco (CSCO), CVS Health (CVS), Shopify (SHOP)
Thursday: Alibaba (BABA), Nvidia (NVDA), PepsiCo (PEP)
Friday: AstraZeneca (ABBV), Enbridge (ENB)
Source: Zacks, February 7, 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.
The Week on Wall Street
Stock benchmarks declined for a second straight week as coronavirus news tempered risk appetite.
The S&P 500 fell 2.14% on the week. The Nasdaq Composite dipped 1.76%, and the Dow Jones Industrial Average, 2.55%. Away from North America, developed markets slumped 2.24%, according to MSCI’s EAFE index.
The Fed Makes a Minor Move
The Federal Reserve left short-term interest rates alone at its January meeting, but it did make what Fed chairman Jerome Powell called a “small technical adjustment” in view of its continuing purchases of Treasuries. Wednesday, it slightly increased the interest rate paid to banks that park excess capital reserves at the Fed.
The move may give the Fed a bit more control over short-term rates this quarter and assist the operations of U.S. financial markets.
Encouraging New Consumer Data
Rising to 131.6 in January, the Conference Board’s Consumer Confidence Index reached its highest level since August. Consumer spending increased 0.3% in December, according to a new Department of Commerce report.
Economy Expanded at a 2.1% Pace in Fourth Quarter
The Bureau of Economic Analysis released this estimate Thursday. That number matches the gross domestic product of the third quarter and affirms that the U.S. avoided a fall slowdown.
THE WEEK AHEAD: KEY ECONOMIC DATA
Monday: The latest snapshot of factory sector health from the Institute for Supply Management, presenting January data.
Wednesday: ISM’s January report on the state of non-manufacturing businesses and the latest private-sector payrolls report from Automatic Data Processing (ADP).
Friday: The Department of Labor releases its January employment report.
Source: MarketWatch, January 31, 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
Monday: Alphabet (GOOG), Sysco (SYY)
Tuesday: BP (BP), Fiserv (FISV), Gilead Sciences (GIL), Walt Disney (DIS)
Wednesday: GlaxoSmithKline (GSK), Merck (MRK), Qualcomm (QCOM), Toyota (TM)
Thursday: Bristol-Myers Squibb (BMY), Cigna (CI), Philip Morris (PM), Sanofi (SNY)
Friday: AbbVie (ABBV), Honda (HMC), Novo Nordisk (NVO)
Source: Zacks, January 31, 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.
Stocks were up in December. Investors showed guarded optimism, thanks to continuing trade negotiations between the U.S. and China as well as positive market data as the year came to a close.
Also, the Federal Reserve chose to end the year with a more “dovish” stance. After three rate cuts spread over the last year, it remains to be seen how long the Fed can hold its current monetary stance.
In this month’s video, Austin will discuss some more of the recent headlines that influenced the financial markets in December, and also provide some perspective on what these developments may mean in the months ahead. If you have any questions or concerns regarding your financial situation after viewing this video, please reach out to us at (419) 425-2400, or send us an email at hello@hzcapital.com.
Christmas is right around the corner, and a there are so many things happening in the economy right now. In this month’s video, we’ll discuss some recent headlines that influenced the financial markets in November.
We will also provide some perspective on what these developments may mean in the months ahead. Again, if you have any questions or concerns about your financial situation after viewing this video, you can reach out to us at hello@hzcapital.com, or give us a call at (419) 425-2400. We would love to chat with you.
We wish you and yours a very Merry Christmas, and a Happy New Year!