Weekly Market Snapshots
Two practice areas 280 combined years of practice
November 15, 2019

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

In his congressional testimony, Fed Chair Powell repeated that “we see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2% objective.” Powell noted that large federal budget deficits could limit the scope for fiscal stimulus during an economic downturn and eventually crowd out private investment, leading to slower growth.

As expected, seasonal adjustment amplified an increase in gasoline prices in both the CPI and PPI, but core inflation was moderate and pipeline inflation pressures continued to recede. Retail sales results for October were largely in line with expectations, but core sales for August and September were revised lower (implying a slower near-term trend in consumer spending growth). Industrial production fell further in October, reflecting the GM strike and a drop in the output of utilities (otherwise, the manufacturing output weakened modestly).

Next week, the economic calendar thins out. September is largely a transitional month for housing activity. The FOMC minutes (from the October 29-30 policy meeting) are expected to show that officials were split on the appropriate course of monetary policy, but there should be a general consensus that no further cuts are likely for the time being. The Index of Leading Economic indicators should post a third consecutive monthly decline. Despite ongoing impeachment hearings, the House is expected to vote on a Continuing Resolution to fund the government beyond the November 21 deadline.


Indices

  Last Last Week YTD return %
DJIA 27781.96 27674.80 19.10%
NASDAQ 8482.10 8434.18 27.79%
S&P 500 3094.04 3085.18 23.53%
MSCI EAFE 1972.37 1981.56 14.66%
Russell 2000 1589.18 1593.99 17.81%

Consumer Money Rates

  Last 1 year ago
Prime Rate 4.75 5.25
Fed Funds 1.54 2.18
30-year mortgage 3.80 4.96

Currencies

  Last 1 year ago
Dollars per British Pound 1.284 1.299
Dollars per Euro 1.102 1.131
Japanese Yen per Dollar 108.74 113.64
Canadian Dollars per Dollar 1.327 1.324
Mexican Peso per Dollar 19.449 20.411

Commodities

  Last 1 year ago
Crude Oil 57.12 56.25
Gold 1463.30 1210.10

Bond Rates

  Last 1 month ago
2-year treasury 1.59 1.59
10-year treasury 1.82 1.76
10-year municipal (TEY) 2.43 2.28

Treasury Yield Curve – 11/15/2019

Chart

As of close of business 11/14/2019


S&P Sector Performance (YTD) – 11/15/2019


Chart

As of close of business 11/14/2019


Economic Calendar

November 19  —  Building Permits, Housing Starts (October)
November 20  —  FOMC Minutes (October 29-30)
November 21  —  Jobless Claims (week ending November 16)
 —  Leading Economic indicators (October)
 —  Existing Home Sales (October)
 —  Budget Deadline
November 22  —  UM Consumer Sentiment (November)
November 27  —  Real GDP (3Q19, 2nd estimate)
 —  Durable Goods Orders (October)
 —  Personal Income and Spending (October)
 —  Fed Beige Book
November 28  —  Thanksgiving Holiday (markets closed)
December 11  —  FOMC Policy Decision

 

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business November 14, 2019.