In this week’s recap: China jolts the markets by devaluing
the yuan, aggregate second-quarter earnings top analyst projections, and stocks
retreat for the week.
Weekly Economic Update
THE WEEK ON WALL STREET
Stocks
spent much of last week rebounding from a Monday drop that reflected
nervousness about the U.S.-China trade fight. By Thursday’s closing bell, the
S&P 500 had regained all its Monday losses, but it descended again on
Friday.
The
three big U.S. equity benchmarks finished the week lower: the S&P declined
0.46%; the Dow Jones Industrial Average, 0.75%; the Nasdaq Composite, 0.56%. A
broad index of foreign shares, the MSCI EAFE, lost 0.95%.1,2
China Devalues Its Currency
Last
Monday, stocks fell 3% in reaction to the overnight weakening of the Chinese
yuan. A weaker yuan makes Chinese exports cheaper for buyers who pay for them
in dollars.
Critics
quickly accused China of manipulating its currency to strike back at the U.S.
The federal government plans to impose tariffs on nearly all Chinese products
next month, likely making those goods more expensive to American consumers; a
weaker yuan could counter the effect of those import taxes.”3,4
Earnings Season Update
Ninety
percent of S&P 500 firms have now reported second-quarter results. Their
collective sales and profits have surprised to the upside.
Stock
market analytics firm FactSet says that overall earnings have beaten estimates
by 5.7%. Seventy-five percent of firms have reported actual earnings per share
surpassing estimates, which is better than the five-year average.5
FINAL THOUGHT
We
are seeing a significant bond rally this summer, even with interest rates at
very low levels. (When bond prices rise, bond yields tend to fall.) At the
moment, about a quarter of the global bond market is invested in government
notes with negative interest rates. The 10-year Treasury stands in contrast.
Friday, it was yielding 1.74%.6,7
T I P O
F T H E W E E K
If you think you need to save more for retirement, think about saving at a rate that is slightly above your “comfort zone.” This calls for some financial discipline and dedication, but your future self may thank you years from now.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: The July Consumer Price Index appears, reporting the country’s monthly
and annual rate of inflation.
Thursday: July retail sales numbers from the Census Bureau.
Friday: The initial August University of Michigan Consumer Sentiment Index
presents the latest snapshot of household confidence in the economy.
Source:
Econoday / MarketWatch Calendar, August 9, 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
Monday: Sysco
(SYY)
Wednesday: Cisco
(CSCO)
Thursday: Alibaba
(BABA), Applied Materials (AMAT), Nvidia (NVDA), Walmart (WMT)
Friday: Deere
& Co. (DE)
Source:
Zacks.com, August 9, 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
“Dignity does not come in possessing
honors, but in deserving them.”
ARISTOTLE
T H E W E E
K L Y R I D D L E
You write the word one on a piece of paper. An observer tells you
she can make one
disappear by adding something to it. Is this true, and how can
she do it?
LAST
WEEK’S RIDDLE: What two things will you never be able to eat at dinner?
ANSWER:
Breakfast and lunch.
Troy L Thompson CFP may be reached at 515-432-5421
or troy@thompsonfinancialinc.com
www.thompsonfinancialinc.com
www.thompsonfinancialinc.com
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Troy Thompson, CFP
DBA Thompson Financial and Hanson Asset Strategies
Securities offered through FIRST HEARTLAND CAPITAL, INC.
Member FINRA & SIPC.
Thompson Financial is not affiliated with FIRST HEARTLAND
CAPITAL, INC.
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.
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1 - wsj.com/market-data
[8/9/19]
2 - quotes.wsj.com/index/XX/990300/historical-prices [8/9/19]
3 - bloomberg.com/news/articles/2019-08-04/asia-stocks-set-to-drop-with-trade-back-in-focus-markets-wrap
[8/5/19]
4 - bloomberg.com/news/articles/2019-08-05/china-hits-back-at-trump-with-weaker-yuan-halt-on-crop-imports
[8/5/19]
5 - insight.factset.com/earnings-season-update-august-9-2019 [8/9/19]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
[8/9/19]
quotes.wsj.com/index/SPX/historical-prices
[8/9/19]
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
[8/9/19]
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