Author: Raffa Wealth Management

Raffa Wealth Management

Financial News and Portfolio Management Discussion through December 7th

US stocks closed the week relatively flat after strong economic news to end the week helped the market recover from concerns over negative trade news.  The S&P 500 was up 0.2%, while the Dow ticked down 0.1% for the week.  Abroad, the FTSE All-World Ex-US rose 0.5% for the week.  The 10-year Treasury yield rose over the week to end at 1.84%.  Oil rose over 7% to finish the week at $59.20.

Trump announced the US would levy tariffs against Argentina and Brazil’s steel, at 25%, and aluminum, at 10%, accusing them of purposely devaluing their currencies.  Tariffs were also proposed against $2.4 billion of French goods of up to $100% over a digital-services tax aimed at US tech companies.

US manufacturing fell further into contraction territory in November surprising analysts.

Two surveys in China pointed to improving confidence and demand from manufacturers.  Manufacturing in the Eurozone contracted less than expected.

Trump made comments saying trade negotiations with China could last well into next year.

The November Jobs reports blew past expectations with 266,000 jobs added topping the 187,000 expected.  Previous months were also revised up 41,000.  The unemployment rate declined to 3.5% and wage growth edged up to 3.1%.

Japan approved a $120 billion stimulus plan, its most significant stimulus measure in over three years.

OPEC agreed to cut crude oil output by roughly 40% next year as it pushed for higher prices.

US consumer sentiment rose in early December.

 

 

November Market Commentary

US stocks continued to reach new record highs in November aided by positive economic news, strong corporate earnings, and optimism over the direction of US/China trade talks. With nearly all S&P 500 firms reporting earnings for the third quarter, 75% of firms have reported earnings that beat expectations and earnings overall declined 0.4%, outpacing the 4.6% expected. Economic news remained generally positive in November. Hiring in October topped expectations with 128,000 new hires, despite the GM strike, and August and September hiring was revised up. The unemployment rate ticked up to 3.6% from 3.5% as more individuals joined the workforce. Retail sales grew 0.3%, and durable goods orders rose more than expected in October. US consumer sentiment rose, and business activity reached a reading at a fourth month high in November. Third-quarter GDP was revised up to 2.1% from 1.9%. In November, US stocks surged 3.80% taking the year to date return to 27.34%.

Foreign stocks rose over the month on encouraging economic and trade news. Economic growth in the European Union edged up slightly in the third quarter to 0.9% from 0.8%. Germany edged up as well, growing 0.3% in the third quarter. Japan, however, slowed significantly to 0.2% from 1.8% in the second quarter. China’s Commerce Ministry issued a statement saying the US and China trade negotiators “reached a consensus on properly solving related issues,” upbeat language that progress was being made in trade talks. A measure of Chinese factory activity unexpectedly expanded in November after six months of contraction. Emerging markets trailed developed markets for the month and year to date. Foreign stocks rose 0.93% in November and have climbed 17.10% for the year to date.

Bonds edged down over the month as interest rates rose slightly. Investors grew more optimistic about the global economy and the direction of trade talks and moved away from safe-haven assets. In minutes from the Fed’s October meeting, they offered few clues about their next move focusing more on a wait and see approach as they evaluated global growth and trade and their impact on the US. In testimony on Capitol Hill, Fed Chief Powell said he didn’t see any immediate need to adjust interest rate policy but was open to reassessing with new data. The 10-year Treasury yield rose slightly over the month to finish at 1.78%, up from 1.69% to start the month. For the month, generally, shorter-term bonds outpaced longer-term bonds and credit and muni bonds were the top-performing sectors. The US bond market ticked down 0.15% in November but is up 6.67% for the year to date.

 

Index Performance  Nov.YTDTrl. 1 Yr.
US Stock (Russell 3000)3.80%27.34%15.49%
Foreign Stock (FTSE AW ex-US)0.93%17.10%11.85%
US Bond Mkt. (BarCap Int. Gov/Credit)-0.15%6.67%8.09%
Municipal Bonds (BarCap 1-10yr Muni)0.23%5.31%6.35%
Cash (ICE ML 3Month T-Bill)0.12%2.13%2.32%

 

Financial News and Portfolio Management Discussion through November 30th

US stocks rose over the week on optimism on the direction of US/China trade talks, hitting new record highs.  The S&P 500 rose 1.0% and Dow gained 0.8% for the week.  Abroad, the FTSE All-World Ex-US was up 0.2% for the week.  The 10-year Treasury yield was flat over the week finishing at 1.78%.

China’s Commerce Ministry issued a statement saying the US and China “reached a consensus on properly solving related issues,” upbeat language that progress was being made in trade talks.

Third-quarter US GDP was revised up to 2.1% from 1.9%.

October US durable goods orders rose more than expected.

Consumer spending rose 0.3% in the US in October from September.

A measure of Chinese factory activity unexpectedly expanded in November after six months of contraction.

LVMH is acquiring Tiffany & Co. for $16 billion.

Schwab has agreed to buy TD Ameritrade for $26 billion.

Financial News and Portfolio Management Discussion through November 23rd

US stocks declined for the week on concerns about the direction of US/China trade talks.  The S&P 500 declined 0.3% and Dow fell 0.4% for the week.  Internationally, the FTSE All-World Ex-US eased 0.4% for the week.  The 10-year Treasury yield eased over the week to finish at 1.77%.

In minutes from the Fed’s October meeting, they offered few clues about their next move focusing more on a wait and see approach as they evaluated global growth and trade and their impact on the US.

Business activity in the US posted a reading at a four-month high in November, while Europe showed declining growth.

US consumer sentiment rose surprisingly in November.

Financial News and Portfolio Management Discussion through November 16th

US stocks closed the week at record highs on trade optimism and solid economic news.  The S&P 500 rose 0.9% and Dow surged 1.2% for the week.  Abroad, the FTSE All-World Ex-US index edged down 0.3% for the week. The 10-year Treasury yield eased to finish at 1.83%.

In testimony on Capitol Hill, Fed Chief Powell said he didn’t see any immediate need to adjust interest rate policy but was open to reassessing with new data.

The CPI rose 0.4% in October from September, slightly higher than expected.

Third-quarter GDP slowed to 0.2% in Japan from 1.8% in the second quarter.  Germany grew 0.3% in the third quarter a slight pickup from the second quarter.

Economic growth in the EU edged up slightly in the third quarter to 0.9% from 0.8% in the second.

Retail sales rose 0.3% in October.

With over 90% of S&P 500 firms reporting earnings roughly 75% have beaten expectations.  Earnings have fallen 2.3% from a year earlier, better than the 4.6% drop expected.