Investment News from Sumner Wealth Management

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Wealth Management Newsletter

Volume: 8 Issue: 1

Friday, 06 December 2019

 
 

Dear Visitor,

Equities Rally

Equity markets   rallied this week, relieved that President Obama decided to seek   Congressional approval before proceeding with any form of military action in   Syria. In addition, key data releases were suggestive of an economy that was   growing, perhaps at a faster pace than in the first half of the year, but not   so rapidly to alarm markets into thinking that the Federal Reserve will   aggressively start to put the brake on the monetary policy accelerator.

Index Returns (%) 

Source:  Bloomberg

                                                                                                                                                         
   

Index

   
   

 1 Week

   
   

YTD

   
   

1     Year

   
   

Dow Jones 30

   
   

0.76

   
   

13.88

   
   

12.14

   
   

S&P 500

   
   

1.36

   
   

16.05

   
   

15.11

   
   

Russell 2000

   
   

1.84

   
   

21.21

   
   

22.23

   
   

MSCI EAFE

   
   

2.76

   
   

8.74

   
   

15.20

   
   

S&P GS Commodities

   
   

1.00

   
   

3.61

   
   

-1.45

   
   

U.S. Trade-Weighted $

   
   

0.08

   
   

2.98

   
   

2.37

   

Index Levels

Source:  Bloomberg

                                                                                                                                                                                                               
   

Index

   
   

 Current Week (9/6/13)

   
   

Prior     Week (8/30/13)

   
   

Year     End (12/31/12)

   

Year     Ago(9/7/12)   

   

Dow Jones 30

   
   

14,923

   
   

14,810

   
   

13,104

   
   

13,307

   
   

S&P 500

   
   

1,655

   
   

1,633

   
   

1,426

   
   

1,438

   
   

Russell 2000

   
   

1,030

   
   

1,011

   
   

849

   
   

842

   
   

MSCI EAFE

   
   

1,744

   
   

1,697

   
   

1,604

   
   

1,514

   
   

S&P GS Commodities

   
   

5,066

   
   

5,015

   
   

4,889

   
   

5,140

   
   

U.S. Trade-Weighted $

   
   

82.15

   
   

82.09

   
   

79.77

   
   

80.25

   
   

U.S. 10Yr Treasury Yield(%)

   
   

2.93

   
   

2.77

   
   

1.71

   
   

1.67

   

Syria Decision Looms 

The   situation in Syria seems to appear increasingly complex. Last weekend the   U.S. looked poised to strike after Secretary of State John Kerry forcefully   pushed for American action. However, over the weekend President Obama sought   to draw the process out by seeking Congressional approval before launching   any attack. Though Congress returns to Washington on September 9, it may take   a week or more for the Senate and the House to vote on the matter. President Obama   is scheduled to address the nation on Tuesday regarding Syria. Furthermore,   the international community appears divided on the matter, with Russia   pledging to help Syria in case of external aggression.

Oil Bubbles Up 

With the   uncertainty surrounding Syria looking like it may linger, oil rose above $110   per barrel this week. Higher energy prices act like a tax on consumer   budgets. If energy prices remain elevated and start to impede spending,   economic growth would be hindered. In addition, the Federal Reserve is set to   possibly start tapering its asset purchase program at its next meeting on   September 18. Though not necessarily a negative, a less accommodative Federal  Reserve could certainly be taken as a "less positive" for the   economy and markets.

Economic Data Continues to Show Strength 

This   week's Institute of Supply Management surveys (manufacturing and services)   both surprised to the upside. Offsetting concerns that maybe the economy was   starting to grow too quickly was Friday's Non-Farm payrolls report. While   headline job growth came in just shy of expectations (169,000 versus   180,000), the preceding two months were revised down by 74,000 jobs. Also,   the 0.1 percent drop in the unemployment rate to 7.3 percent was largely   reflective of the labor participation rate falling to its lowest level since   1978! Consensus is that the data is still supportive of the Federal Reserve   commencing the winding down of its bond buying program on September 18,   though it appears it may be more of a "taper lite" at this point,   especially with Syria events unfolding.

Tower of Uncertainties 

Of course, in the weeks ahead markets will   have to contend with other geo-political uncertainties as well. Last week   U.S. Treasury Secretary Jacob Lew announced that the debt ceiling would be   breached by mid-October. With Syria occupying much of Washington's energies,   one has to wonder how much progress has been made to bridge the gap between   President Obama's "won't negotiate" stance and House of   Representatives Speaker John Boehner's pledge to stage "a whale of a   fight?" Congress also has to pass a continuing resolution by September   30 or the government will shut down. Germany is set to go to the polls on   September 22, and consensus is that Chancellor Angela Merkel will be   re-elected. Also, with Ben Bernanke set to step down on January 31, a new   chairman of the Federal Reserve will have to soon be nominated and voted on.   While Janet Yellen, Vice Chairwoman of the Board of Governors of the Federal   Reserve (think second in command behind Chairman Bernanke), is the more known   quantity in economic circles, former Treasury Secretary Larry Summers is also   a leading candidate.

Markets in a Good Position 

Markets have been drifting for the last   few weeks, driven more by a lack of demand as opposed to an uptick in   selling. One positive has been that near-term investor sentiment has dialed   back to neutral. As such, markets are in a better position to react in a more   balanced way to the full agenda of economic and geo-political issues that   await in the weeks ahead.

 

 

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