Greetings,

 

Here are several highlights from last week’s market activity, as well as developing stories the investment team is following this week.  As always, we remain committed to helping you navigate the ever-changing investment environment.

 

The following highlights should not be viewed as a recommendation, nor is this a notification of an impending change in asset allocation.  For more information, please contact your advisor with any questions.

Notices and Reminders for Year-End Planning:

  • Required Minimum Distributions: RMDs are Due before December 31st. Trades need to be placed prior to December 24th.
  • Charitable Gifts Securities: It is advisable to do this prior to December 1st. There is no guarantee that gifts of securities will be processed in time if done late in December.

 

Office Closures:

  • Thanksgiving Holiday - November 22 & 23, 2018
  • Christmas Holiday - December 24 & 25, 2018
  • New Year Holiday - December 31, 2018 & January 1, 2019

INVESTMENT TERM OF THE WEEK

Bear Market

 

 A bear market is a condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases. Although figures vary, a downturn of 20 percent or more from a peak in multiple broad market indexes, such as the Dow Jones Industrial Average (DJIA) or Standard & Poor's 500 Index (S&P 500), over a two-month period is considered an entry into a bear market.  Source: Investopedia

In the Markets

LAST WEEK

  • Equities rallied following the conclusion (ex-Florida) to the midterm elections.
  • The DJIA finished the week at 25989.30, up +2.84% on the week.  The S&P 500 closed at 2781.01, up +2.13% on the week. The NASDAQ finished up +0.68% on the week.  U.S. 10-year Treasury ended the week yielding 3.19%.   In the energy markets, crude oil settled at $60.19.  Year-to-date the S&P 500 is up +4.02%.

 

THIS WEEK

  • In economic news: CPI, Import Prices, Retail Sales, Industrial Production and Capacity Utilization data for October will be reported.  Investors will hope to get a better read on how the data may impact Fed moves.
  • Bond market is closed for Veterans Day.
  • Earnings data from Home Depot, Cisco, and Nordstrom is set to be reported.
  • The European Commission’s deadline for the Italian government to submit an amended 2019 budget draft is Tuesday.

In the News

LAST WEEK

  • Washington Recap:  Midterms concluded, Attorney General Sessions resigned, and the President and Press Corps were less than cordial to each other.
  • Democrats took control of the House, flipping 30 seats, while Republicans consolidated their hold on the Senate.  Democrats flipped 7 governorships.  Florida race remained open pending a recount.
  • Sanctions on Iranian oil kicked in.  Oil prices have been falling with crude hitting bear-market territory on Thursday.   Late in the week a federal judge blocked construction of the Keystone Pipeline.
  • Twelve people were killed by a gunman in a California bar.
  • Wild fires raged on in California, with at least 220 people reported missing and 31 dead.

 

THIS WEEK

  • Attention will focus on trade and earnings as markets move beyond midterm elections.
  • California’s deadly wildfires look to continue as strong winds fan flames.
  • The Florida recount continues with Republican leads shrinking.
  • Veterans Day will be observed on Monday, November 12th.  This year marked the 100-year anniversary of the end of World War I.

Thought of the Week

On the heels of the election we thought a recent note from the astute team at JP Morgan summed up our thoughts well.

 

“Last Tuesday’s U.S. midterm election results played out as expected, with the Democrats taking control of the House of Representatives and the Republicans retaining control of the Senate. The initial market reaction was positive, as gridlock in Washington should help reduce political uncertainty. However, we advise against letting politics determine investment decisions for a number of reasons.

 

This week’s chart shows consumer confidence by party affiliation since 2000; it is interesting to note how things ebb and flow based on which party has control in Washington. These indices are based on a weekly survey that asks questions around the perceived strength of the economy and the state of personal finances; although these two groups experience the same economic trends, they can have very different views on the environment. This suggests that politics do impact investment decisions, and may have led many to miss out on market gains over the past two years given their political stance. Looking to the remainder of 2018, U.S. economic and profit fundamentals continue to look solid, suggesting that there are still returns to be had, even in a late cycle environment. As a result, investors should allow fundamentals, rather than politics, to be their guide when making investment decisions.”

Please do not hesitate to call your advisor if you have any questions.  Until we speak again, have a wonderful week.

These highlights should not be viewed as a recommendation, nor is this a notification of an impending change in asset allocation. For more information, please contact your advisor with any questions. Opinions expressed in the attached article are those of Judith McGee and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice.

 

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MWM Economic Review

November 12, 2018

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