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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.

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