Monthly Economic Update: June 2019

Transcript:

Hello, folks, this is Derek Merkler with an economic update for June 2019.

After 2019 started strong with four straight monthly gains, U.S. indices stumbled in May. The S&P 500 lost 6.58%, the Dow Jones Industrial Average dropped 6.69%, and the Nasdaq Composite gave back 7.93%.[1]By month’s end, each index had experienced at least 4 weekly losses in a row. The Dow’s six-consecutive weeks of losses was its longest since 2011.[2]

So, why did the markets swing to weeks of consecutive losses?

While countless factors affect stock performance, one topic dominated investors’ minds: tariffs.

Investors had been hoping that the long-running trade tension between China and the U.S. would end soon. But a resolution could be further away than many expected.[3]

Throughout the month, the U.S. and China went back and forth on tariff changes. The U.S. even blacklisted a major Chinese telecoms company, which makes it extremely hard to do business with U.S. firms. In response, China threatened to stop exporting rare-earth minerals used when producing mobile devices and electric cars.[4],[5]

Stocks stumbled on the last day of trading, following President Trump’s threatened tariffs on Mexico, in response to the illegal flow of South American migrants into the U.S.[6]

While trade tension was a concern for the markets, the economic data wasn’t all doom and gloom.

For example, consumer confidence remained solid. May’s reading reached a 6-month high, and respondents had the best view of the present economic situation since 2000.[7]In addition, unemployment reached its lowest level since 1969.[8]Corporate earnings season also wrapped up with 76% of companies in the S&P 500 beating earnings-per-share projections.[9]

When I began making these videos about a year ago, trade disputes with China dominated headlines, just as they are today.  No one knows how long this process is going to take or what the end result will be.  So continue to focus on executing your financial plan and let the day-to-day headlines fade into the background.

That’s it for this month’s economic update. See you next time!

Credits:

Thanks for watching!

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Remember, the topics discussed in this video are for informational purposes only and that past results do not guarantee future performance. If you would like to discuss your financial situation, please email me at Derek.Merkler@Parsonex.com. 

Advisory services offered through Parsonex Advisory Services, Inc., 8310 S.Valley Hwy, Suite 110, Englewood, CO 80112. 303-662-8700.

 

 

[1]https://www.reuters.com/article/us-usa-stocks/wall-st-skids-jolted-by-trumps-surprise-tariff-threat-on-mexico-idUSKCN1T11GO

[2]https://www.cnbc.com/2019/05/31/us-stock-futures-fall-after-trump-announces-new-tariffs-on-mexico.html

[3]https://www.apnews.com/8954cb985707423893f89cfc1d4c0345

[4]https://www.reuters.com/article/us-usa-trade-china/tough-talk-from-china-leaves-trade-talks-with-u-s-in-limbo-idUSKCN1SN207

[5]https://apnews.com/af8ed9e6b95f4d14b32e6e0135949159

[6]https://www.apnews.com/8954cb985707423893f89cfc1d4c0345

[7]https://www.bloomberg.com/news/articles/2019-05-28/u-s-consumer-confidence-tops-forecasts-rises-to-six-month-high

[8]https://www.bls.gov/news.release/empsit.nr0.htm

[9]https://www.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_053119.pdf

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