Markets “In a Nutshell” for November 12, 2019

Investment Week at a Glance

Stocks finished up for the week.  The Dow Jones Industrial Average was up 1.22%, the S&P 500 rose 0.85%, the New York Stock Exchange Composite (2,000 stocks) rose 0.81% and the average investors index (Value Line Index) was up 1.19%.  Foreign stocks (DJ Global ex U.S.) were up 0.75%.  Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 22 basis points higher at 1.94%.  (Data source: Wall Street Journal)

Mixed Messages on Tariffs

Markets started the week digesting another round of ever changing messages regarding the trade dispute between the U.S. and China. Chinese officials started the week saying that a Phase 1 trade deal was in the works and pointed to progress being made after the U.S. had agreed to roll back tariffs that had already been placed on China. The U.S. responded promptly stating that tariff rollbacks were not part of the deal. After all that, markets went back to square one on clarity regarding the discussions, but optimism still remains high that a deal resolving the lighter issues between the two countries can get done. It is unlikely that the U.S. will easily scale back its most used negotiating tool anytime soon, even in an economy slowing down back to around 2% growth. (Barron’s)

Fed Governors Signal Pause on Rates

After the Fed made its decision to cut rates 0.25% two weeks ago, the regional governors of the Federal Reserve rushed out last week, as they always do, to defend their move to add stimulus to the economy and give an outlook on what they plan on doing in the future. For the first time in roughly 6 months, it looks like the Fed is content with where rates are now and would need some negative catalyst to cause another cut in the future. Stocks have almost unanimously gone up since the Fed communicated that they would begin cutting rates and after three cuts, the market will have to adjust to less active accommodation from the Fed and see if stocks can support these current all-time highs. If 3rd quarter earnings reports provide any insight into how companies are performing, then it looks like stocks should continue to perform well as it seems the worst news has passed. Unfortunately, there remain a sizeable amount of risks out there that could affect the future outlook and a need for patience remains.

Quiz:

Saudi Arabia plans on listing its’ national oil company, Aramco, on public markets and is attempting to become the largest publically traded company in the world. What is the high end of the country’s estimate of the value of the company?

 

1. $500 billion
2. $1 trillion
3. $1.5 trillion
4. $2 trillion

 

 

Answer below.

 

Have a Great Week!

 

 

 

 

 

Answer to quiz:

4.     The country would like to list Aramco on public markets at $2 trillion. Apple, Microsoft and Amazon have likewise been hovering around a $1 trillion valuation for over a year now.