Talking Points of the Week for Financial Advisors (1/20)
January 20th, 2020
- The phase one trade deal with China was signed on Wednesday, including a partial rollback of US tariffs on Chinese goods and commitments from China to purchase more US goods and services, though largely based on demand. Investors are looking towards phase two negotiations, though reports signaled the Trump administration is likely to hold off on reducing tariffs further until after the election in November. Also, the US Senate finally passed the USMCA trade deal with Mexico and Canada, replacing NAFTA, sending it to the President's desk for his signature.
- Fourth-quarter earnings season kicked off this week with strong results within the financial sector, notably JP Morgan Chase and Morgan Stanley blew through estimates. The retail sector largely has yet to report but some headwinds may be in store as reports of a high-level leadership reshuffle at Walmart as well as lackluster holiday sales at Target hit the media.
- Markets continued their upward march with new records being set on the back of trade optimism and the start of the Q4 earnings season. Alphabet crossed a $1T valuation, joining the small club with Apple and Microsoft (Amazon briefly crossed but has since fallen down to "only" $924B).
- New housing starts significantly beat estimates for December (1.61M vs 1.38M expected) and hit their highest level since 2006. This helped create some optimism around Q4 GDP growth figures, despite lackluster industrial production.
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