Perspectives

The equity markets, following three consecutive weekly gains, declined last week as concerns relating to trade, Federal Reserve policies and oil supplies weighed on market sentiment. The Russell 2000® Index fell 1.17%; losses for the other indices included the Dow Jones Industrial Average (-1.05%), Nasdaq (‑0.72%) and S&P 500® (-0.51%). The week began with news of drone attacks, purportedly by Iran, on Saudi Arabia’s production facilities; the impact on production, 5.7 million barrels … View More

Positive trade-related commentary from the U.S. and China provided momentum as markets rebounded from oversold conditions for many cyclical stocks. The Russell 2000® Index rose 4.85%, its best weekly gain since 2016. The Dow Jones Industrial Average (1.57%), the S&P 500® Index (0.96%) and the Nasdaq (0.91%) were also positive for last week. Some analysts note that a trade deal might provide a greater upside for value stocks over growth stocks; indeed, this week’s gains in the Russell 200… View More

Equity markets continued to rally last week as the U.S. and China announced plans to meet again in early October. The S&P 500® Index (1.79%) led the major indices, followed by Nasdaq (1.76%), Dow Jones Industrial Average (1.49%) and the Russell 2000® Index (0.69%). New tariffs went into effect on September 1st; and the markets, in the absence of progress in trade negotiations, reacted negatively. Also, the release of the July ISM Manufacturing Index, which fell below 50 for the first time … View More

The equity markets rebounded last week to close the month on a positive note.   The Dow Jones Industrial Average (3.02%) led the major indices, followed by the S&P 500® Index (2.79%), Nasdaq (2.72%) and Russell 2000® Index (2.42%).  Commentary from the U.S. and China seemed to suggest that both sides want to continue trade discussions; the previously scheduled September meeting has not been canceled.  Also, China has not responded to the latest tariff increases from the U.S.; and Chin… View More

The U.S./China trade war continued to dominate headlines last week as China announced tariffs of 5% to 10% on $75 billion of goods, including autos and oil, effective September 1st and December 1st.  The action was in response to President Trump’s previously announced tariffs scheduled for September 1; they may also reflect China’s displeasure over the decision to sell $8 billion of F-16 fighter jets to Taiwan.  Markets closed lower for the fourth consecutive week: the Russell 2000® Inde… View More

The equity and bond markets ended a volatile week last week in a somewhat optimistic mood.  Once again, trade and geopolitical events took center stage as the markets posted another week of losses.  On Wednesday, recessionary fears drove an 800 point (3%) decline in the Dow Jones Industrial Average, its biggest selloff of the year.  The equity markets fell in reaction to a yield curve inversion (that is, when the yield on the 10-year U.S. Treasury Note  fell below the 2-year U.S. Treasury N… View More

Overnight between August 13th and August 14th, the 10-Year U.S. Treasury Interest Rate dropped below the 2-Year U.S. Treasury Interest Rate.  In the investment world, this is known as a “Yield Curve Inversion.” The inversion of the 2-year and 10-year treasury is significant because historically every recession has been preceded by an inversion of the 2-year and the 10-year treasury rate and because it is uncommon to experience this yield curve inversion without a recession occurring within… View More

The term “trade war” seems appropriate in describing the escalating dispute between the U.S. and China. A week ago Friday, President Trump’s announcement a September 1st tariff increase; on Monday, China, announced it would stop buying American agricultural products and allowed the yuan to devalue to levels not seen since 2008. Subsequent commentaries speculated on the economic impacts to each side as the markets sold off and then largely recovered. Then on Friday, President Trump indicate… View More

Trade concerns continue, despite stronger-than-expected earnings results, to cast a shadow over the equity and bond markets.  Last Thursday, President Trump, dissatisfied with trade negotiations, threatened to implement a 10% tariff on September 1st for the remaining $300 billion of Chinese exports not already subject to tariffs.  The markets immediately sold off on fears that an expansion of trade tariffs with China would further damage the U.S. economy.  Last week, Nasdaq declined 3.92%; S… View More

With two dissents, the FOMC cut the fed funds rate -25bp today.  This does not have to be the start of a “long” series of rate cuts according to Fed Chair Powell, but some additional action is still possible.  Lower neutral interest rate assessments, global risk, and still-too-low U.S. inflation were mentioned as key factors for cutting rates today, despite the recent stronger-than-expected GDP and jobs reports. The statement included: “[i]n light of the implications of global developme… View More