Weekly Market Commentary - Sept 11, 2019

The Markets

Remember the movie Groundhog Day?

Bill Murray’s character is a crotchety newsman who lives the same day over and over again. After exhausting other options, he chooses selfimprovement and eventually escapes the cycle.

The movie came to mind last week when the United States and China headed to the negotiating table. Again.

Global stocks rallied on the news. Again.

The U.S.-China trade war has had a significant impact on stock market performance during the past two years. Since the trade war began, major global stock markets have rallied when trade talks are announced and retreated when trade talks fail. In 2018, MarketWatch reported:

“Trade issues have been at the center of Wall Street’s concerns because they have the potential to ripple into every other issue that has been besieging investors, if [the trade war] escalates. That includes the growth outlook for U.S. corporations, an economic slowdown in China, the pace of rate hikes, and the health of the U.S. economy and stock market…”

While there are concerns over the effects that tariffs have on American consumers, some companies, such as Home Depot, which source a large portion of their products from China, have noted that the U.S.-China trade war’s effect on prices has not been substantial; CNBC reported that Home Depot projected a 2% cost increase as a result of the tariffs. Home Depot also expects that suppliers diversifying their manufacturing processes outside of China will reduce this cost increase to 1%.

Last week, Fox News pointed out that the tariffs could be detrimental to U.S. economic growth, especially if consumer spending slows. However,Chief Economist Brian Wesbury at First Trust, continues to reiterate the fact that the U.S. economy continues to show strength. With low unemployment (overall unemployment has not been lower since 1969), a higher participation rate (the percentage of adults who are either working or looking for work), and accelerating payroll growth (hourly earnings are up on average 3.2% in the last twelve months, more than in 2018), he argues, the U.S. economy is still on track.

Falling unemployment, First Trust notes, has also been broad-based. Workers without a high school degree, African Americans and Hispanic workers are all currently experiencing unemployment rates which are the lowest on record. At the same time, the fastest growth for earnings has been on the low end of the earnings spectrum, with labourers who did not complete a high school education seeing wage increases almost double the national average.

That said, investor sentiment has a big effect on the markets. Investors are hoping for, even expecting a trade deal, but many economists, including those at Goldman Sachs, do not believe that a deal will be reached before the 2020 U.S. presidential elections.

We expect more volatility as the trade war drags on, even though the data coming out of the U.S. is still very positive. If you are worried about your investment portfolio, please don’t hesitate to give us a call.

Source: Thomson Reuters

Group outings? Gift requests? Let's talk money etiquette.

If you’re of the generation that believes money is a taboo topic, stop reading. If you’ve encountered some perplexing money issues and want to learn more about money-related social etiquette, read on.

Issue: The bride and groom would prefer cash to gifts. Is it okay to request cash?

Answer: It is not okay to ask invited guests to give you cash, writes Carolyn Hax of The Washington Post. “There’s no polite way to bill guests for liking you, pat their pockets for loose change, or coerce them into paying your bills. So, please don’t try. Thank you.”

Issue: You’re organizing a group gift, outing, or trip. How do you avoid money conflicts?

Answer: BuzzFeed Finance recommends avoiding group texts, which “…are a breeding ground for peer pressure and anxiety. Suddenly, everyone agrees that $50 is a reasonable birthday amount, while one person had budgeted to spend around $20 and now feels too awkward to speak up. If you're the person organizing a joint gift, it's worth reaching out to people separately to gauge interest and a reasonable dollar amount.”

Issue: You’re raising money for several charities. How often can you ask the same person for a donation?

Answer: It depends, say the editors at Real Simple. It’s okay to approach immediate family for every cause, but limit requests to distant relatives, friends, and acquaintances to a couple of times a year. “You'll get better results – and keep more friends – by targeting your solicitations, rather than blasting your entire address book.”

Issue: Your girlfriend broke up with you on a peer-to-peer (P2P) payment app. All your friends saw it.

Answer: The default setting for most P2P payment apps is ‘public.’ As a result, people you know – and anyone else using the platform – can see who you paid, when you paid, and (sometimes) what you purchased. Consumer Reports suggests, “Make all your P2P settings the most private possible to ensure the least sharing of your personal data.”

When it comes to money, every generation faces unique challenges.

Weekly Focus – Think About It

“Etiquette is all human social behavior. If you're a hermit on a mountain, you don't have to worry about etiquette; if somebody comes up the mountain, then you've got a problem. It matters because we want to live in reasonably harmonious communities.” --Judith Martin (a.k.a. Miss Manners)

Best regards,