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Weekly Update Archives

Weekly Market Update for November 27, 2019

by JM Hanley

The Dow was up on Wednesday, rising 98 points to close at 28,164. So far this week, the Dow is up 1.0% (SP500 +1.4%) and year-to-date is now up 20.7% (SP500 +25.8%). The yield on the 10-year Treasury (an important interest-rate indicator) was unchanged, closing at 1.77%. The price of crude oil was unchanged this week at $58 a barrel – up 28% YTD.

Economic data from the US has mostly been good this week.  Third quarter GDP estimates were revised up, and now show a 2.1% increase. Income growth was notably strong, a positive. Home prices increased more than expected last month. So did capital expenditures (long-term corporate spending).

News was worse in China. Industrial profits in the still manufacturing-reliant country fell 10% last month. Exports, and another indicator of corporate profitability, also dropped last month.   The dismal readouts may prompt Beijing to accelerate ongoing fiscal and monetary stimulus. If trade negotiators can’t reach a compromise, the expansive slate of US tariffs scheduled for December 15 may come into effect, which would make the situation worse.

On a related note, sentiment surrounding a trade deal with China also improved.  Beijing has apparently conceded that it will need to improve protections for intellectual property.  Communication between high-level negotiators would seem to augur well.

Our offices will be closed Thursday in observance of Thanksgiving. We’ll be lightly staffed on Friday.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss.

Weekly Market Update for November 22, 2019

by JM Hanley

The Dow was up on Friday, rising 109 points to close at 27,876. For the week, the Dow was down 0.5% (SP500 -0.3%) and year-to-date is now up 19.5% (SP500 +24.1%). The yield on the 10-year Treasury (an important interest-rate indicator) fell six basis points, closing at 1.77%. The price of crude oil was unchanged this week at $58 a barrel – up 28% YTD.

China trade deal headlines came fast and furious this week, but as the week ends the situation is little changed. China was unhappy with legislation passed by Congress that affirmed American support for protestors in Hong Kong. Beijing encouraged the President to veto it. The US Chamber of Commerce, noting the glacial pace of negotiations thus far, predicted that signing the first phase of a deal may slip into the New Year. Beijing and Washington were both at pains to deny that possibility. In other political news, passage of the NAFTA rewrite may now slip into next year. It had originally been expected to receive an (affirmative) vote in Congress this month.

Weekly domestic data was mostly positive. A survey of manufacturers came in slightly better than expected, as did its equivalent for the service sector. New orders and employment were both better than expected, a positive sign. Consumer sentiment, which has sustained economic growth as other areas of the economy have faltered, was also better than forecast. The Fed’s rate-cutting activities also seem to have pushed up long-term inflation expectations. News from Europe was less encouraging. A survey of industry and the service sector was near lows reached in September – consistent with GDP growth of just 0.8% – though Germany and France did well. Political tensions in Spain may be to blame. However, manufacturing (long a sore spot) showed some hopeful glimmers. Additionally, European consumer confidence proved resilient.

Shares of Lowe’s rose this week after the home improvement retailer reported a strong third quarter. Sales were better than feared after weak earnings at peer Home Depot. Profit margins also climbed from last quarter. Execution of the new CEO’s turnaround plan continues. The firm reduced senior management and culled stores in its underperforming Canadian division. Loyalty programs targeted at home improvement professionals have been augmented, and an outdated online sales platform is scheduled for an upgrade.

Our offices will be closed next Thursday in observance of Thanksgiving. Highlights on the economic calendar include a speech by Jerome Powell in Rhode Island on Monday, personal consumption expenditures (on Wednesday), and a second estimate of third quarter GDP on Wednesday.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss.

Weekly Market Update for November 15, 2019

by JM Hanley

The Dow was up on Friday, rising 223 points to close at 28,005. For the week, the Dow was up 1.2% (SP500 +0.9%) and year-to-date is now up 20.1% (SP500 +24.5%). The yield on the 10-year Treasury (an important interest-rate indicator) fell twelve basis points, closing at 1.83%. The price of crude oil rose one percent this week to $58 a barrel – up 28% YTD.

There was little news of substance on the trade front this week. Negotiation continues on the phase one deal announced in October. Across the Atlantic, the Administration has apparently scrapped plans for duties on European cars after Brussels threatened onerous retaliatory tariffs. A modus vivendi between Washington and carmakers may take the form of higher investments, and an expanded workforce, at US plants.

October inflation took top billing in this week’s litany of economic data. Excluding the volatile categories of food and energy, it was lower than expected. Healthcare costs and used car prices were higher than expectations, while rent, clothes, and hotel prices were lower. Weakness in the latter two may prove temporary. The impact of higher costs associated with new tariffs was negligible. Modestly light inflation is unlikely to move the Fed for the time being. In testimony on Capitol Hill, Chairman Jerome Powell repeated the position (first taken at last month’s Fed meeting) that the central bank is done cutting rates bar a dramatic deterioration in the economic outlook.

Other numbers illustrated more of the same: growth has slowed, but remains steady. The industrial economy is weaker than the rest. Retail sales came in higher than expected, but industrial production fell and a survey of New York manufacturers was also weak. Additionally, the recent improvement in Europe has held steady. Third quarter growth in Germany (the continent’s economic engine) had been expected do contract, but grew instead. But industrial production and retail sales were both weak in China, which strengthens the case for Beijing to cut interest rates and increase spending.

Companies have largely finished reporting third-quarter earnings. Health insurance stocks rallied today, capping a strong few weeks. These firms have underperformed the rest of the market this year – despite healthy fundamentals – due to concern about more far-reaching iterations of Medicare for All, which would abolish private health insurance. Senator Warren and the legislation’s leading Congressional sponsor both walked back those plans today.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss.

Weekly Market Update for November 8th, 2019

by JM Hanley

The Dow was up on Friday, rising 6 points to close at 27,681. For the week, the Dow was up 1.2% (SP500 +0.9%) and year-to-date is now up 18.7% (SP500 +23.4%). The yield on the 10-year Treasury (an important interest-rate indicator) rose twenty-four basis points, closing at 1.95%. The price of crude oil rose two percent this week to $57 a barrel – up 26% YTD.

The week brought renewed optimism on the trade deal. The spokesman for China’s Ministry of Commerce said Thursday that the US and China had agreed to eliminate tariffs currently in place after sufficient progress on a trade deal. This optimistic prospect was later tempered by reports of strong resistance to such a move by some in the Administration.

The domestic economic outlook continues to be firmer than expected. Factory orders declined last month. But an important service-sector index rebounded by more than expected, driven by strength in business activity and employment. Consumer sentiment also improved. Confident consumers have been an important contributor to the economy’s resilience. News from Europe has also gotten better. German factory orders and retail sales throughout the Eurozone came in strong this week.

It was another busy week for third quarter earnings reports. Axon, which makes Taser, saw its share price surge today after reporting very positive results. Supply chain problems for the new Taser have been resolved, and shipments are good. Its new body camera, which gives senior personnel a live view, has also proven popular with police chiefs. CVS also did better than expected, and raised its forecast for full-year profits. Management was able to resolve problems that had arisen in its health insurance division (formerly Aetna) last quarter more quickly than anticipated. Trends have also been better than feared at its retail pharmacies.

Fidelity Information Services also put up better than expected numbers, and reported that early signs from recent acquisition WorldPay are encouraging. Merging both firms’ back office functions can save more than originally anticipated, and the management team sees robust opportunities to sell WorldPay’s products to Fidelity’s international customers. Fidelity provides internal software to banks and WorldPay helps process credit card transactions. One-time Fidelity subsidiary Black Knight, which sells software for servicing mortgages, was not so lucky. One of its larger clients opted to depart the platform. Such departures are rare and growth is expected to return to normal the year after next. Finally, Air Lease (which leases passenger jets to airlines) continues to navigate the grounding of the 737 Max well.

Next week is considerably lighter. Tencent is scheduled to report on Friday. So far, 80% of companies in the SP500 have reported. Earnings have been unchanged from last year, which is actually 5% better than expected. This, along with good economic data and the improved trade situation, has accounted for the market’s rise over the last few weeks.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss.

 

Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464