Weekly Commentary — August 26th, 2019
The Week on Wall Street
Traders assumed that the week’s biggest news event would be Federal Reserve Chairman Jerome Powell’s speech at the annual Jackson Hole banking conference. Instead, China seized the headlines by announcing new tariffs on U.S. goods.
Domestic stocks ended up lower for the week. The Nasdaq Composite fell 1.83%; the S&P 500, 1.44%; the Dow Jones Industrial Average, 0.99%. International stocks posted a weekly gain: the MSCI EAFE benchmark rose 0.96%.,
Beijing Plans New Tariffs
Friday morning, China’s finance ministry stated it would levy import taxes of 5-10% on an additional $75 billion of American imports. One set of tariffs is slated to start September 1, targeting U.S. crops, meats, and seafood. A second set, effective December 15, will put tariffs on U.S.-made cars and car parts. In total, these taxes are scheduled for more than 5,000 American products.
Powell Reflects at Jackson Hole
Friday, Jerome Powell delivered an address on monetary policy at the Kansas City Fed’s annual Jackson Hole symposium. He noted that the global economy currently presented a “complex, turbulent picture,” and added that the Fed was “carefully watching developments” and would “act as appropriate.”
Investors wonder if the central bank will consider another rate cut at its September meeting. Comments from other Fed officials at Jackson Hole did not indicate a consensus on that matter.
Leading Indicators Rise
The Conference Board, the business research group known for its monthly Consumer Confidence Index, also publishes a monthly Leading Economic Indicator (LEI) Index. The Conference Board LEI provides a forward-looking analysis of the health of the business cycle, looking at ten factors ranging from consumer expectations to stock prices to construction activity.
In July, the LEI rose 0.5%, following 0.1% descents in May and June. This sudden increase offers optimism at a time when investors are wondering about the momentum of the economy.
Bond prices have risen around the world, leading to lower bond yields. In some instances, yields have turned negative. While the yield on the 10-year Treasury has also declined, it is still above 1.5%, notably exceeding the yields of similar-duration bonds in France, Germany, Spain, and the United Kingdom.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: The Conference Board’s July Consumer Confidence Index.
Thursday: The Bureau of Economic Analysis presents the second estimate of second-quarter economic growth, and the National Association of Realtors publishes new data on pending home sales.
Friday: July consumer spending data from the Department of Commerce, and July’s final University of Michigan Consumer Sentiment Index (a gauge of consumer confidence levels).
Source: Econoday / MarketWatch Calendar, August 23, 2019
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: Autodesk (ADSK)
Thursday: Abercrombie & Fitch (ABF), Best Buy (BBS), Lululemon Athletica (LULU)
Source: Zacks, August 23, 2019
“The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty.”
– Winston Churchill
Protect Your Financial Safety in the Case of a Natural Disaster
We never want to think of a natural disaster happening, but the truth is that floods, fires, hurricanes, and tornadoes can happen at any time, especially during the summer. No matter where you live, you should be aware of the possible natural disasters in your area and plan accordingly. Prepare for these natural disasters by considering the following tax tips:
- Update your emergency plan.
- Create electronic copies of all important documents.
- Document your valuables. Documenting these items ahead of time makes it easier to claim insurance and tax benefits if a disaster strikes.
- You can call the IRS at 866-562-5227 with any natural disaster-related questions. They can provide copies of previous tax returns, order transcripts showing most line items, and more.
- Net personal, casualty, and theft losses may be deductible if they’re attributable to a federally declared disaster.
The IRS also has a video all about preparing for disasters. In it, it includes more tax tips for planning ahead.
* 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 IRS.gov
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