10/11/19 – Groundhog Day – Trade

A strong rally today on positive China trade news pulled markets higher on the week. Wednesday evening a headline came out of China that ‘no progress’ had been made on trade which sent the Dow down 300 points in futures trading. By midday Thursday though, the climate changed and today a Chinese official said there were ‘very good’ negotiations this week. Treasury Secretary Mnuchin also announced no new tariffs would start next week as previously scheduled. It’s crazy to me how much the market can swing of this issue. It seems to drive trading everyday. That’s telling us the market knows a trade deal would be a huge positive and no-deal sharply increases recession risk. For the week, the Dow gained 0.9% while the S&P 500 increased 0.6%. Read More

GE announced this week it was freezing the pension plan for 20,000 salaried employees. GE will also offer numerous employees the opportunity to take a lump-sum cash payment and forego future pension payments. This continues a trend we’ve seen for years. Pension obligations are nearly impossible to accurately project as retirees continue living longer. This has forced companies to make multi-billion pension contributions in recent years in an attempt to keep up with funding expected future liabilities. This is one more reason individuals need to be planning for their own retirement. Pension plans are struggling financially. Corporate pensions are in better shape than government pensions, but none are in great shape. If you have the option to take a lump sum payment, it’s worth considering that alternative. If you’re still in a pension plan, make sure you’re saving outside the plan to supplement potential future pension cuts. Read More

Oil increased 3.2% this week to close at $54.67/barrel. The yield on the 10-yr Treasury moved sharply higher, closing at 1.74%, from 1.53% last week. The average rate on a 30-yr fixed rate mortgage moved lower to 3.57% from 3.65% last week.     

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