Stocks finished higher for the 11th straight month this year and many stock indexes hit new highs. The S&P 500 soared 1.5%. The MSCI ACWI and the Bloomberg BarCap Aggregate Bond Index were basically unchanged.
The U.S. Senate passed its version of tax reform that will now be reconciled with the bill passed earlier in the House. Personal consumption expenditures rose by only 0.2% due to a decrease in automobile purchases since the hurricane season. Fed Chair Jerome Powell’s policy stances sound similar to Janet Yellen’s, but he distinguished himself in his stance on financial regulations. The European Union is getting closer to an agreement with Britain on issues related to Brexit and a replacement trade deal.
Key points for the week
- The U.S. Senate passed its version of tax reform.
- U.S. personal income rose by 0.4%, while consumer prices rose by 0.2%.
- Jerome Powell’s opening testimony suggested a similar approach to former Federal Reserve Chair Janet Yellen on interest rates.
- The European Union and Britain are closer to a Brexit settlement and revised trade deal.
What are we reading?
Below are some areas of the market we paid particularly close attention to this week. For further information, we encourage our readers to follow the links.
Personal income in the U.S. rose by 0.4%, beating expectations for October. Underlying price pressures continue to push higher, while consumer expenditures increased by 0.2%. This slight slowdown in consumer expenditures can be attributed to fewer automobile purchases since Hurricanes Harvey and Irma.
On Tuesday, new Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee, providing some insight on what to expect from him in the future. Powell agreed the Fed has taken the right course of action since the 2008 financial crisis, which suggests he will follow a plan similar to Yellen’s. However, Powell showed differences between him and his predecessor as he spoke negatively of strong financial regulations. This will be something to watch going forward.
The European Union and Britain are nearing an agreement on the terms of Britain’s exit from the EU. The negotiation progressed when the EU established an overall price at around 50 billion euros, which accounts for prior obligations made by Britain before the vote to exit. Though this number hasn’t been agreed upon, EU diplomats said a deal was close. The most difficult aspect of Brexit currently is a sticking point over Ireland and how it will establish its border after exiting the EU.
Fun story of the week
Last year, Wanda Dench sent a group text informing her grandkids of what time Thanksgiving dinner started. She soon found out she included a wrong number: 17-year-old Jamal Hinton. He asked if he could come to dinner anyway, and Dench agreed. This year, Hinton returned for Thanksgiving dinner in what is now a family tradition.
This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of CWM, LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
S&P 500 INDEX
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
MSCI ACWI INDEX
The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 23 emerging markets (EM) countries*. With 2,480 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index
The Bloomberg U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.