January 14, 2020

Key Catalysts for Financial Markets During the Quarter:

  • Several positive comments from both U.S. and Chinese officials about progress made toward a phase one agreement spurred optimism for an improving global trade situation.
    • The limited agreement announced in early December lowered some U.S. tariffs and suspended the new tariffs that were to go into effect December 15. China announced a lowering of certain tariffs on U.S. imports and said it would increase purchases of U.S. farm and other goods.
  • More good news on trade came in December when the House of Representatives finally passed the United States Mexico Canada Agreement with the Senate expected to approve the deal in January.
  • Recession fears diminished helped by the positive trade news and by better than expected economic data for the U.S. and China as well as an uptick in manufacturing data in Europe.
  • Uncertainty and fears about a “hard Brexit” were reduced after news that key sticking points to an agreement had been ironed out and Boris Johnson’s conservative party won a sizeable majority in the December election setting the stage for the United Kingdom to leave the European Union at the end of January.
  • Monetary policy provided additional support. In the U.S., the Federal Open Market Committee (FOMC) lowered its policy rate target range to 1.50% – 1.75% in October. Both the FOMC and the European Central Bank (ECB) stated they do not intend to increase interest rates until inflation reaches their 2% targets.

Notable Events:

  • The S&P 500 index had 22 new closing highs. The Dow Jones Industrial Average and Nasdaq Composite also had several new highs with the Nasdaq closing over 9,000 for the first time. The Russell 2000 index hit a 52-week high.