Markets couldn’t overcome concerns over North Korea’s test of a hydrogen bomb and the risks of Irma last week. While stocks rose on the news of a temporary debt-ceiling deal, for the week, the S&P 500 still slid 0.6%. The MSCI ACWI was essentially unchanged and the Bloomberg BarCap U.S. Aggregate Bond Index rose up 0.5%.
Global central banks remain a key focus of investors. Some Fed governors publically stated concerns about raising rates again this year in the face of weak inflation data and the declining odds of additional infrastructure spending. The European Central Bank is beginning to look for ways to slow its stimulus and, in a surprise move, Canada raised its benchmark interest rate.
Key bullet points for the week
- As predicted, the debt ceiling increase was attached to the hurricane bill and extends debt ceiling until December
- Irma on top of Harvey has increased insurance risk and raised risk of defaults on mortgages in the affected areas
- S. stocks dropped last week while global stocks held firm and bonds rose
Equifax: The Not so Fun Story of the Week
143 million American consumers were affected by the data breach at Equifax, one of the nation’s three major credit reporting agencies. To learn more about Equifax’s cyber security incident, including whether your personal information was potentially impacted, click here.
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:
On Thursday, the Senate approved a package of bills, including about $22 billion for FEMA’s disaster relief fund, $15.25 billion of which is new, emergency funds, and another $6.7 billion was already slated to be in the spending measure that funds the government. The emergency funding would raise the debt ceiling and keep the government open for three months.
Economic devastation from storms is becoming more common. In inflation-adjusted terms, the United States averaged fewer than three billion-dollar natural disasters per year from 1980 to 1990. Since 2010, it has averaged more than 10 per year. Changing climate is one of the reasons cited for the severity of the recent storms.
The European Central Bank is working on ways to wind down its massive quantitative easing program. The goal of the policy was to promote growth and inflation in the Eurozone after the financial crisis in 2008. Improved economic performance in Europe has helped push the euro higher against the dollar.
Fun Story of the Week
While Braintree, MA has a history of brave rebels (John Adams), the conflict between the juniors and seniors of Braintree High School left both sides on the losing end. It seems the juniors had been parking in the senior parking lot. To teach them a lesson, the seniors deliberately parked exactly opposite the lines so as to reduce the parking spots available. While effective at stymying the juniors, the stunt did not humor the Braintree police department. They issued 65 parking tickets and some remedial lessons in parking that were posted on its Facebook page.
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.