Thanksgiving week provides new all-time highs

Market Recap Week ending 11/29/2019

The Thanksgiving holiday-shortened week provided a new set of all-time highs for the S&P 500, Dow, and NASDAQ.  Constructive rhetoric related to China’s greater enforcement of intellectual property rights bolstered trade negotiation sentiment.  The S&P 500 gained just under 1% on the week.  The Dow was up 0.63%, the NASDAQ increased 1.7%, and the Russell 2000 made a new 52 week high with a gain of 2.24%.  The yield curve steepened slightly with the 2-year note yield losing three basis points to close at 1.60%, and the 10-year bond yield gaining one basis point to close at 1.78%.  Gold gained $6.80 to close at $1470.40 an Oz.  Oil lost $2.46 on the week to close at $55.42 a barrel on doubt that another near term production cut would be agreed to by all OPEC members.  Our Core Satellite Model series, had several changes last week.  We reduced exposure to international equity, intermediate US Treasuries, global real estate, and domestic real estate.  We increased exposure to US equities, European Equities, gold, and US high yield bonds.  Please let us know if you have any questions regarding the changes. 

As I mentioned, positive tones on intellectual property right enforcement encouraged market sentiment on trade between US and China and helped to lift markets early in the week.  However President Trump’s signing of the Hong Kong Human Rights and Democracy Act caused angst for some Chinese officials and cast doubt on the progress of further negotiations. 

On the economic front, US data continued to look a bit better than international data.  The second reading on 2nd quarter GDP was 2.1%, better than the first reading of 1.9%.  The Chicago PMI for November came in at 46.3, a little less than the consensus estimate of 47.1 but ahead of October’s reading of 43.2.  The Fed Beige book for December was little changed from the prior figure but did seem to indicate that the consumer continues to be resilient.  However, The Conference Board’s Consumer Confidence index did decline for the 4th consecutive reading coming in at 125.9 versus expectations of 126.9 and below October’s 125.9.  Internationally, manufacturing continued to show signs of contraction.  October Industrial production in South Korea fell 1.7 versus the consensus estimate of 0.1 and in Japan came in at -4.2 versus expectations of -2.1%.  Additionally, China’s industrial profits fell the sharpest in over eight years. 

Darren Leavitt, CFA

Portfolio Manager

& Sr. Market Analyst