Weekly Market Recap

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Weekly Market Recap

September 30, 2019

Last Week:

Return

Index

Close Week YTD

Dow Jones Industrial Average 26,820 -0.4% 15.0%

S&P 500 Index

2,962 -1.0% 18.1%

NASDAQ

7,940 -2.2% 19.7%

Russell 2000 Index

1,521 -2.5% 12.7%

MSCI EAFE Index

1,896 -0.9% 10.2%

10-yr Treasury Yield

1.68% -0.04% -1.00%

Oil ($/bbl)

$55.85 -3.9% 23.0%

Bonds*

$113.14 0.2% 8.3%

Source: Bloomberg, 09/20/19

*Bonds represented by the iShares U.S. Aggregate Bond ETF

U.S. Equity Markets ? U.S. large cap equities (S&P 500 Index) fell -1.1% as House Speaker Pelosi confirmed the House would begin impeachment proceedings against President Trump, U.S. economic data generally disappointed, and U.S.-China trade tensions remained with mixed signals from President Trump and the White House. Mid-caps, Small-caps, and NASDAQ all underperformed, although Barron's opined that "this bull market seems pretty unimpeachable" o Utilities (+1.3%), consumer staples (+1.2%) and REITs (+0.2%) outperformed as investors favored more defensive sectors, while consumer staples benefitted from Philip Morris (+5.5%) and Altria (-1.6%) ending merger talks o Financials (-0.2%) outperformed with strength from Wells Fargo (+4.3%) which named a new CEO, regional banks, and property & casualty insurers o Industrials (-0.4%) outperformed with strength from Boeing (+0.9%) o Information technology (-0.8%) outperformed, but experienced weakness in semiconductor and software stocks o Consumer discretionary (-0.9%) outperformed as weakness in cruise ships and restaurants was offset by strength in homebuilders and select retailers & apparel (Nike +6.5% on strong earnings results) o Materials (-1.1%) underperformed with weakness from both industrial and precious metals o Communication services (-2.3%) underperformed with Facebook (-6.8%) hit by regulatory scrutiny, Netflix (-2.8%) falling, and weakness in video game stocks o Energy (-2.6%) underperformed as oil prices fell -3.9% on a faster rebound of Saudi production and partial ceasefire agreement in Yemen o Healthcare (-3.0%) underperformed with political uncertainty as an overhang. Health insurers were particularly weak (United Health -7.6%), as investors appeared to price in a greater

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Weekly Market Recap

September 30, 2019

likelihood of Democratic inroads in the 2020 elections (Massachusetts Senator Elizabeth Warren overtook former Vice President Joe Biden atop several recent Democratic primary polls) ? Speaker of the House Nancy Pelosi announced she is initiating an impeachment inquiry against President Trump, relative to potential abuse of power in his conversations with Ukraine's President. Even if the House proceeds with articles of impeachment, it is unlikely that the Republican-controlled Senate would generate a 2/3 majority in order to remove the president from office, according to the Washington Post ? WeWork's CEO resigned, after the company's planned IPO got shelved amid concerns about selfdealing and other corporate governance issues ? Peloton came public, pricing its IPO at $29/share, the high end of the proposed range. The stock promptly opened below its IPO price Thursday morning. Buyers of the IPO endured an 11% loss in the stock's first day of trading, making it the third-worst "unicorn" ($1B+ company) debut since 2008, according to Bloomberg. Peloton's CEO appeared on CNBC Thursday, saying the business is "recession proof." The stock continued to cycle lower Friday morning ? "Some investors have speculated that the market might be topping out ahead of a possible U.S. slowdown over the next year. However, this would be very unusual, as equities have always had a double-digit rally before the economy experiences a downturn," according to Natixis Chief Economist Joe Lavorgna

Source: Haver, Natixis

? 100% of countries have an overnight interest rate below that of the United States

Source: Bianco Research, Bank of International Settlements Policy Rate Statistics

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Weekly Market Recap

September 30, 2019

U.S. Economic and Political News ? Consumer Spending ticked up 0.1% in August, with Personal Incomes rising 0.4% ? Weekly Jobless Claims ticked up 3,000 to 213,000

Source: Labor Department via FRED

? Durable Goods Orders rose 0.2% in August, and ex-Transportation orders increased 0.5%, but Core Capital Goods Orders fell for a second-straight month

? Personal Consumption Expenditures (one of the Federal Reserve's preferred inflation gauges) checked in with a year-over-year increase of 1.4%. With that measure well below the Fed's 2% target, it would seem to provide ample ground cover for future monetary accommodation by the central bank

Source: Commerce Department via FRED

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Weekly Market Recap

September 30, 2019

? The University of Michigan's Consumer Sentiment index rose to 93.2, topping the 92.0 consensus forecast

International Markets and News ? European equities (STOXX Europe 600) rose +1.2% as the long-standing European Central Bank support continues to be a positive driver, France announced tax cuts, weaker Eurozone economic data was released, and mixed trade headlines were reported o The UK courts ruled against Prime Minister Boris Johnson's decision to suspend Parliament, throwing Brexit discussions back into a black hole o Reports suggested that the White House may apply rotating tariffs on European products in an attempt to maximize the pain on Europe ? Chinese markets (Shanghai Composite Index) fell -2.5% as mixed signals from the White House on U.S.-China trade negotiations were reported, industrial profits fell in August and producer prices declined o China's Ministry of Commerce confirmed that China has bought a "considerable" amount of U.S. soybeans and pork ahead of high-level talks set for October 10-11 in Washington ? Japanese equities (Nikkei 225 Index) fell -0.9% as manufacturing sector dipped to a seven-month low of 48.9 (results below 50 indicate contraction), consumer price growth grew at the slowest pace in two years, and U.S. and Japan reached a partial trade deal o On Wednesday, President Trump and Japanese Prime Minister Abe signed a limited trade deal that takes effect at the beginning of 2020, which will lead to lower tariffs on U.S. agricultural and other goods, while allowing for tariff-free digital commerce between the two countries

Commodities ? The price of gold fell -0.6% for the week ? The price of crude oil prices fell -3.9% on a faster rebound of Saudi production and partial ceasefire agreement in Yemen. Oil remains up 23% in 2019 after collapsing in the 2nd half of 2018

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Weekly Market Recap

September 30, 2019

This Week:

? L'Shana Tova (Happy New Year) to all those celebrating Rosh Hashanah today ? The third quarter concludes today, with most broad U.S. stock indices sitting on 15-20% year-to-date

gains ? In early Monday trading, U.S. stock futures point toward modest gains ? This week will see limited earnings reports. Notable releases include, but are not limited to: Thor

Industries, McCormick & Co, Stitch Fix, Acuity Brands, Lennar, Lamb Weston Holdings, Paychex, RPM International, Bed Bath & Beyond, PepsiCo, Constellation Brands, Costco ? U.S. economic data:

o Monday: Chicago PMI, Dallas Fed index o Tuesday: Manufacturing PMI, ISM Manufacturing Index, Construction Spending o Wednesday: MBA Mortgage Purchase Applications, ADP Employment Report o Thursday: Services PMI, Factory Orders, ISM Non-Manufacturing Index, Durable Orders o Friday: Average Hourly Earnings, Average Weekly Hours, Nonfarm Payrolls, Unemployment

Rate, Trade balance

As always, thank you very much for your interest in our thoughts and support of our services.

Whitney Stewart, CFA? Executive Director

Adam Bergman, CFA? Executive Director

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