Equities Face Volatility

Weekly Commentary — 8/19/19

The Week on Wall Street

U.S. stock indices saw significant ups and downs last week, with traders looking for economic cues from Treasury yields and also developments in the tariff fight between the U.S. and China.

The S&P 500 lost 1.03% on the week; the Dow Jones Industrial Average and Nasdaq Composite respectively declined 1.53% and 0.79%. Overseas shares also retreated: the MSCI EAFE index lost 2.34%.[1],[2]

Attention on the Bond Market

Wednesday, the yield of the 2-year Treasury bond briefly exceeded that of the 10-year Treasury bond. When this circumstance occurs, it signals that institutional investors are less confident about the near-term economy. That view is not uniform. Asked whether the U.S. was on the verge of an economic slowdown, former Federal Reserve Chair Janet Yellen told Fox Business “the answer is most likely no,” noting that the economy “has enough strength” to avoid one.

The demand for bonds has definitely pushed prices for 10-year and 30-year Treasuries higher, and their yields are now lower (bond yields usually fall as bond prices rise). The 30-year Treasury yield hit a historic low last week.[3],[4]

Some China Tariffs Postponed

Last week, the Office of the U.S. Trade Representative announced that about half the Chinese imports slated to be taxed with 10% tariffs starting September 1 would be exempt from such taxes until December 15.

The White House said that the reprieve was made with the upcoming holiday shopping season in mind so that tariffs might have less impact on both retailers and consumers.[5]

Final Thought

Lower interest rates on bonds are now influencing mortgages. According to mortgage reseller Freddie Mac, the average interest rate on a conventional 30-year home loan was just 3.6% last week. That compares to 3.81% roughly a month ago (July 18).[6]

30-year and 15-year fixed rate mortgages are conventional home loans generally featuring a limit of $484,350 ($726,525 in high-cost areas) that meet the lending requirements of Fannie Mae and Freddie Mac, but they are not mortgages guaranteed or insured by any government agency. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment.

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: The minutes of the July Federal Reserve meeting and the latest existing-home sales data from the National Association of Realtors.

Friday: Federal Reserve Chairman Jerome Powell delivers a speech atthe Fed’s annual Jackson Hole economic conference on monetary policy, and July new home sales numbers arrive from the Census Bureau.

Source: Econoday / MarketWatch Calendar, August 16, 2019

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Baidu (BIDU), Estee Lauder (EL)

Tuesday: Home Depot (HD), Medtronic (MDT), TJX Companies (TJX)

Wednesday: Analog Devices (ADI), Lowe’s (LOW), Target (TGT)

Thursday: Salesforce (CRM), Intuit (INTU)

Source: Zacks, August 16, 2019

 

“The way to get started is to quit talking and begin doing.”

– Walt Disney

 

 

Selling Your Car or Buying From a Private Seller? Here are the Tax Tips You Should Know

Buying a new car is an exciting purchase. If you are buying your next vehicle from a private seller rather than a dealership or selling a used car to an individual, there are a few tax considerations you should know. The first is that if you are selling your car for less than you paid for it, you likely won’t have to pay sales tax on the sale. This is because the IRS considers selling a used car for less than you paid a capital loss. But in contrast, if you are selling your car for more than you paid (like if it’s a classic car you’ve restored and it’s increased in value), you may have to pay sales tax.

If you’re buying a car from a private seller, you’ll have to pay sales tax. But this sales tax doesn’t go to the seller, it goes to the DMV. This sales tax is incorporated in your car’s registration.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from CarGurus[7] 

 

Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues.

If you have any questions or would like to learn more about developing strategies to pursue a prosperous and safe future, contact me today at Derek.Merkler@Parsonex.com! You can also visit my websiteto learn about how I help our service members and veterans plan for and achieve financial independence.

My blog discusses a myriad of financial topics and challenges, book reviews, and commentary on current events in the financial world to benefit our military and veteran community.  I attempt to be as thorough as possible when examining each subject but can never account for every possible scenario.  Please remember to consult with your advisers for advice on your particular situation.  Thank you for reading!

Advisory Services offered through Parsonex Advisory Services, Inc. 8310 S. Valley Highway, Ste. 110, Englewood, CO 80112 (303) 662-8700.


[1]https://www.wsj.com/market-data

[2]https://quotes.wsj.com/index/XX/990300/historical-prices

[3]https://www.cnbc.com/2019/08/15/us-bonds-30-year-treasury-yield-falls-below-2percent-for-first-time-ever.html

[4]https://www.foxbusiness.com/economy/janet-yellen-to-wall-street-a-recession-is-unlikely

[5]https://www.reuters.com/article/us-usa-trade-china-tariffs/trump-delays-tariffs-on-chinese-cellphones-laptops-toys-markets-jump-idUSKCN1V31CX

[6]http://www.freddiemac.com/pmms/archive.html

[7]https://www.cargurus.com/Cars/articles/how_do_taxes_work_on_private_car_sales

Leave a Reply