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
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.
Troy L Thompson, CFP may be
reached at 515-432-5421 or troy@thompsonfinanicalinc.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. Investments will fluctuate and when redeemed may be worth more
or less than when originally invested. This information should not be construed
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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
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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]
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]
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