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Congress Passes Deregulation Bill, Trump Calls Off North Korea Meeting

This weekend we remember those who died in service of the United State’s Armed Forces. Memorial Day is Monday, the 28th.

Market movement this week was relatively uneventful. China and the United States eased rhetoric around imposing tariffs on imports from one another this week, as both countries agreed to hold off as negotiations continue. Trade war concerns will likely continue to contribute to market volatility in the coming weeks. On Thursday, President Trump called off a summit between the United States and North Korea, which was to be focused on the denuclearization of North Korea.

Weekly Returns

S&P 500: 2,721 (+.29%)
FTSE All-World ex-US(VEU): 54.25 (-1.0%)
US 10 Year Treasury Yield: 2.93% (-.05%)
Gold: $1,305 (+1.0%)
EUR/USD: $1.165 (-1.0%)

Major Events

  • Monday – General Electric, in an effort to improve its bottom line, announced a plan to merge its railroad division with Wabtec Corporation – a Pittsburgh based railroad company.
  • Tuesday – Congress approved a bill substantially easing, but not eliminating bank regulations. Part of the bill reduces regulation on smaller regional banks. The bill has been noted as being one of the largest changes to banking regulation since the 2010 Dodd Frank law was passed.
  • Wednesday – North Korea warned that it would cancel upcoming meetings with President Trump if the discussions were solely focused on full denuclearization.
  • Wednesday – Activist Investor Bill Ackman revealed a $1 billion stake in Lowe’s that his investment group acquired over the past two months. Lowe’s share price jumped in response to the news.
  • Thursday – President Trump cancelled the summit with North Korea.
  • Friday – The European Union’s wide sweeping Data Protection Regulation took effect.

Our Take

Of particular interest this week is Tuesday’s deregulation bill passed by Congress. The bill eases a variety of the Dodd Frank 2010 Law provisions, providing more flexibility to both large and small banks in the United Sates.

2018 has seen a rebound in the US Dollar’s price relative to many foreign currencies. This has contributed to stronger US equity performance relative to its blended foreign counterparts, and is exactly the opposite of what investors saw in 2017. This is a great reminder of why it’s important to maintain a diversified collection of global assets.

As an advisor, we certainly had clients asking through the tail end of 2017 if we should decrease their US Equity exposure in favor of high flying International Equities. So far, had we made those changes, those clients would have been worse off in 2018. This is always something that will ebb and flow, and we’re not claiming that we knew what was going to happen. Instead, consider this: just because a certain category has performed well recently, that usually has little, if any, bearing on how it will perform in the future.

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