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Weekly Market Commentary September 4, 2018

| September 04, 2018
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The Markets 

Where is our country’s biggest export market? 

Markets were fired up last week after the United States and Mexico agreed on new trade rules. The Standard & Poor’s 500 (S&P 500) Index reached an all-time high and finished the month of August up about 3 percent, reported Michael Sheetz, Thomas Franck, and Alexandra Gibbs of CNBC

During the latter half of last week, though, the S&P 500 gave back some gains. A hitch in the giddy-up of trade talks between the United States and Canada caused the index to stumble. Damian Paletta, Jeff Stein, and Heather Long of The Washington Post explained: 

“High-stakes trade negotiations between the White House and Canadian leaders unraveled Friday, a major setback in President Trump’s effort to redraw the North American Free Trade Agreement…the United States and Canada have interwoven economies, with integrated supply chains and vast amounts of trade. The value of goods and services sold between the two countries last year reached $673.1 billion, making Canada the United States’ largest export market for goods.” 

The United States exported about $341 billion of goods and services to Canada in 2017, according to The Office of the U.S. Trade Representative website. Our top exports to Canada during 2017 included: 

  • Services ($58 billion)
  • Vehicles ($52 billion)
  • Machinery ($43 billion)
  • Electrical machinery ($25 billion)
  • Agricultural products ($24 billion)
  • Mineral fuels ($20 billion)
  • Plastics ($13 billion) 

Trade talks are expected to resume next week. 


Data as of 8/31/18

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor's 500 (Domestic Stocks)

0.9%

8.5%

17.4%

13.7%

12.1%

8.6%

Dow Jones Global ex-U.S.

0.4

-5.1

0.9

5.9

3.1

1.5

10-year Treasury Note (Yield Only)

2.9

NA

2.1

2.2

2.9

3.8

Gold (per ounce)

0.4

-7.3

-8.3

1.7

-2.9

3.9

Bloomberg Commodity Index

0.1

-5.0

-1.1

-2.7

-8.5

-7.6

DJ Equity All REIT Total Return Index

0.8

4.7

6.8

10.9

11.2

7.9

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

PREPARE FOR A SHAKE UP! From Reuters to Marketplace, economic and financial news shows like to ‘do the numbers.’ They often review economic indicators, Federal Reserve rate changes, or benchmark index performance. 

In general, these statistics are intended to help people gauge how economies and markets are performing. For instance, when Gross Domestic Product (GDP) – the value of all goods and services produced by a nation during a certain period of time – moves higher, it means the economy grew during the period. When GDP moves lower, the economy contracted during the period. 

Asset managers and investors rely on benchmark indices, like the S&P 500 Index, to measure the relative performance of investment portfolios. The S&P 500 is a benchmark for large U.S. company stocks. It includes companies from diverse sectors including: 

  • Information technology
  • Healthcare
  • Financials
  • Consumer discretionary
  • Industrials
  • Consumer staples
  • Energy
  • Utilities
  • Real estate
  • Materials
  • Telecommunications services 

But, wait, change is coming! 

Soon, benchmark indices will have a new sector. At the end of September 2018, Telecommunications Services will become Communication Services. The name is changing and so are the companies that will be included in the sector. Ben Levisohn at Barron’s reported: 

“The biggest changes will be around some prominent companies that will migrate out of the information-technology and consumer-discretionary sectors and into a new communication-services sector…[The changes] certainly don’t herald any fundamental changes for the companies involved. But they do have the potential to create short-term noise…” 

If you’d like to learn about the ways sector changes may affect benchmark indices, give us a call. 

Weekly Focus – Think About It 

“Progress is impossible without change, and those who cannot change their minds cannot change anything."

--George Bernard Shaw, Irish playwright

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