ND&S Weekly Commentary 11.25.19 – Trade Comes Back Into Focus

November 25, 2019

Equities finished the week modestly lower as trade came back into focus. President Trump appears reluctant to reduce tariffs without further concessions from China. On Friday, Chinese President Xi Jinping sounded hopeful the sides could reach a “phase one” trade deal with the U.S. that is based on “mutual respect and equality”. Complicating matters is a bi-partisan bill supporting pro-democracy activists in Hong Kong that was passed by the Senate and House and is awaiting the President’s signature. Beijing has voiced displeasure with the bill. Thus far, they have kept the issue in Hong Kong separate from trade talks, however, that could change the longer the trade issue carries on.

The S&P 500, DJIA, and Nasdaq were all negative on the week as they finished down 0.29%, 0.41%, and 0.20%, respectively. International equities also finished lower with the MSCI EAFE off 0.57% and emerging markets down fractionally. Bonds were positive on the week with yields moving lower. The 10 Year US Treasury closed at a yield of 1.77%. Gold prices continued to hover around the $1,470/oz level. Oil prices rebounded last week closing at $57.88/barrel, the highest level in 2 months.

Economic data released last week was mixed. U.S. housing starts advanced 3.8% month over month in October which came in slightly below expectations. However, existing home sales advanced 1.5% in October which beat expectations. Flash purchasing managers’ indices (PMIs), released on Friday, showed that the global manufacturing sector continued to stabilize with improved readings in the US, Europe and Japan. The upcoming holiday-shortened week includes economic data reports on 3Q19 real GDP (2nd estimate), trade balance, durable goods orders, and personal consumption expenditure (PCE/Core PCE).

Best wishes for a Happy Thanksgiving!

“Vegetables are a must on a diet. I suggest carrot cake, zucchini bread, and pumpkin pie.” Jim Davis