-September 27, 2019 Weekly Capital Market Update. The S&P 500 Index lost -1.01%, Dow Jones Industrial Average slipped -0.43% and Nasdaq dropped ‑2.19% as impeachment overshadowed the week’s corporate, trade and economic news. In terms of performance, defensive sectors such as utilities and consumer staples led markets higher, while health care and energy sectors were the market laggards. On the political front, with democratic front runner Biden under scrutiny and Trump under an impeachment inquiry, markets have been jittered with the rising prospects of Elizabeth Warren who is feared by Wall Street with her disruptive new tax regime ideas. Further, it appears markets have historically been negatively impacted by past Presidential impeachments: back when Watergate unfolded during the 1973-74, stocks plunged to bear market levels but bottomed less than two months after Nixon resigned rather than face impeachment. Stocks also dropped through the fall of 1998 as it became clear President Clinton had lied under oath about his sexual relationship with Lewinsky. Early this week, China, in a sign of goodwill, granted tariff waivers for the purchase of soybeans, pork and other agricultural products.
-September 20, 2019 Weekly Capital Market Update. The U.S. equity market retreated for the week on news of disruption in the bank overnight repurchase markets where the Federal Reserve Bank of New York added $75 billion to the financial system on both Thursday & Friday. The Fed then laid out plans for further liquidity injections going forward. Rates on short-term repos briefly spiked to nearly 10% earlier this week as financial firms scrambled for overnight funding. The actions marked the first time since the financial crisis that the Fed had taken such actions. The central bank said it would offer a series of daily and 14-day term overnight repurchase agreements, or repos, in the coming weeks for an aggregate amount of at least $30 billion each. It also announced daily repos for an aggregate amount of at least $75 billion each until October 10. Other concerns weighing on investor minds were the drone attack on Saudi Arabia’s oil facilities, disrupting more than 5% of global supply and oil prices surging by nearly 10%. For the week, S&P 500 receded -0.51%, the Dow Jones Industrial Average dropped -1.05% and the Nasdaq fell ‑0.72%.
-September 13, 2019 Weekly Capital Market Update. The S&P 500 Index rose +0.96%, the Dow Jones Industrial Average gained +1.57%, and the Nasdaq finished up +0.91% on the third positive week. U.S.-China trade tariff tension de-escalated as China eased tariffs on several products (lubricating oils, alfalfa, etc.) and said it will exempt soybean and pork, which in turn prompted President Trump to then delay tariff increases scheduled to take effect on October 1st. Another upcoming silver lining is next week’s Federal Reserve meeting, where it is widely expected Chairman Powell will announce another 0.25% interest rate cut. There also appears to be a capital flow from growth stocks to value stocks, indicating better balance in weighted holdings (momentum stock have been overplayed). The NFIB report highlighted “Next week, the Federal Reserve is widely expected to announce another interest rate cut.”
-September 6, 2019 Weekly Capital Market Update. Leading the major indices for the week, the S&P 500 Index gained +1.79%, followed by Nasdaq +1.76% and the Dow Jones Industrial Average finishing up +1.49%. For the second week, the U.S. equity markets were largely supported by elevated China-U.S. trade deal expectations, followed by employment numbers and accommodative remarks by Fed Chair Powell. The ISM Non-Manufacturing Index bounced up with higher-than-expected expansion of the service economy while ADP reported 190,000 new jobs compared to estimates of 150,000. Fed Chair Powell expressed remarks that indicated further easing (rate cut) in late September: “Our main expectation is not at all that there will be a recession,’’ Powell said. “There are these risks, and we’re monitoring them very carefully and we’re conducting policy in a way that will address them.’’
-September 20, 2019 Weekly Capital Market Update. The U.S. equity market retreated for the week on news of disruption in the bank overnight repurchase markets where the Federal Reserve Bank of New York added $75 billion to the financial system on both Thursday & Friday. The Fed then laid out plans for further liquidity injections going forward. Rates on short-term repos briefly spiked to nearly 10% earlier this week as financial firms scrambled for overnight funding. The actions marked the first time since the financial crisis that the Fed had taken such actions. The central bank said it would offer a series of daily and 14-day term overnight repurchase agreements, or repos, in the coming weeks for an aggregate amount of at least $30 billion each. It also announced daily repos for an aggregate amount of at least $75 billion each until October 10. Other concerns weighing on investor minds were the drone attack on Saudi Arabia’s oil facilities, disrupting more than 5% of global supply and oil prices surging by nearly 10%. For the week, S&P 500 receded -0.51%, the Dow Jones Industrial Average dropped -1.05% and the Nasdaq fell ‑0.72%.
-September 13, 2019 Weekly Capital Market Update. The S&P 500 Index rose +0.96%, the Dow Jones Industrial Average gained +1.57%, and the Nasdaq finished up +0.91% on the third positive week. U.S.-China trade tariff tension de-escalated as China eased tariffs on several products (lubricating oils, alfalfa, etc.) and said it will exempt soybean and pork, which in turn prompted President Trump to then delay tariff increases scheduled to take effect on October 1st. Another upcoming silver lining is next week’s Federal Reserve meeting, where it is widely expected Chairman Powell will announce another 0.25% interest rate cut. There also appears to be a capital flow from growth stocks to value stocks, indicating better balance in weighted holdings (momentum stock have been overplayed). The NFIB report highlighted “Next week, the Federal Reserve is widely expected to announce another interest rate cut.”
-September 6, 2019 Weekly Capital Market Update. Leading the major indices for the week, the S&P 500 Index gained +1.79%, followed by Nasdaq +1.76% and the Dow Jones Industrial Average finishing up +1.49%. For the second week, the U.S. equity markets were largely supported by elevated China-U.S. trade deal expectations, followed by employment numbers and accommodative remarks by Fed Chair Powell. The ISM Non-Manufacturing Index bounced up with higher-than-expected expansion of the service economy while ADP reported 190,000 new jobs compared to estimates of 150,000. Fed Chair Powell expressed remarks that indicated further easing (rate cut) in late September: “Our main expectation is not at all that there will be a recession,’’ Powell said. “There are these risks, and we’re monitoring them very carefully and we’re conducting policy in a way that will address them.’’