Market Write-Up 9/2/19
Good evening and Happy Labor Day. Thanks for joining me in preparation for the week and month ahead. Tomorrow opens the first day of trading in the month of September. According to the Stock Trader’s Almanac, since 1950, September has been the worst month for all three major stock indices(Dow, S&P, and Nasdaq), and even worse in years preceding presidential elections. Take this statistic with a grain of salt because past performance is not indicative of future results.
The final week of August helped recover much of the losses made earlier in the month. Final 30 day returns for the major indices were: Dow at -0.31%, S&P 500 ay -0.19%, and Nasdaq at -0.51%. I have included 3 charts below. Beginning on Sunday the 25th there was another sharp rise in the U.S. dollar to Chinese yuan ratio last week. See last week’s write-up for why this is important. The next chart displays recent U.S. treasury yields. Keep in mind the yield curve is still inverted as I explained two weeks ago. Finally the last chart shows last week’s market performance.
US Treasury Yields
The most important piece of data to pay attention to here is the difference between the 2 and 10 year rates. When the 2 year rate is greater than the 10 year rate, the curve is inverted.
Notice the leading sector here is transportation which many analysts regard as the best gauge for the health of the economy.
Yesterday more tariffs took effect on Chinese goods. These new tariffs that were scheduled to be implemented yesterday, effect over 125 billion Chinese imports. We are now currently taxing 550 billion dollars worth of Chinese imports at varying percentages.
Taking a look at next week’s economic calendar the Bureau of Labor Statistics releases the monthly jobs report on Friday. This report includes how many jobs were created(or lost) during the month of August as well as how much the average take home pay increased.
A very slow week of earnings this week as we will start to see more reports ramp up the second week of this month to kick off earnings season.
Word of the week:
Tariff- A tariff is a tax imposed by one country on the goods and services imported from another country.Tariffs are used to restrict imports by increasing the price of goods and services purchased from another country, making them less attractive to domestic consumers.
Please send me any comments, questions, or criticisms and as always, thank you for reading.
US Treasury rates provided by the U.S. government
Definition provided by Investopedia.com
Earnings calendar by Earnings Whispers
Economic calendars by Market Watch
Market performance by Barrons