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Weekly Market Digest: A Week of Strong Gains & Personal Capital Launches Private Equity

It was another week of strong gains for major US stock indices that closed the week up over 2%, led by industrial and energy stocks. Global equity markets followed suit and notched a weekly gain of about 2%. Headlines surfaced throughout the week about the US spending bill dispute, Brexit negotiations, and global growth worries, but it was the ongoing trade war that continued to captivate investors’ attention. In other news this week, Personal Capital announced that we are now offering access to private equity investments for our high-net-worth Private Clients!

Weekly Returns

S&P 500: 2775.6 (2.50%)
FTSE All-World ex-US (VEU): (1.78%)
US 10 Year Treasury Yield: 2.66% (.03%)
Gold: $1,321.43 (0.55%)
EUR/USD: 1.1293 (-.33%)

Major Events

  • Monday – Two large Chinese companies failed to make interest payments on their debt, highlighting the bubbling credit market risks in the Chinese economy.
  • Tuesday – President Trump expressed willingness to let the March 1 deadline to raise tariffs on Chinese products slide if the two sides are close to an agreement.
  • Wednesday – Airbus announced decision to stop production of the A380 due to weak sales.
  • Thursday – Amazon nixed plans to build a second headquarters in New York City citing concern about rising political backlash over subsidies.
  • Thursday – December retail sales declined at the fastest pace since 2009 that sparked a selloff in retail stocks.
  • Friday – Industrial production declined 0.6% in January which was well below the expectation of a 0.1% increase.
  • Friday – Markets rallied over a report that the U.S. and China had reached a consensus in some key areas of trade negotiations.

Trade negotiations between China and the U.S. took place in Beijing this week where US Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin met with Chinese negotiators. Both parties agreed the meetings were productive but acknowledged there was still more work ahead. Chinese President Xi Jinping reiterated the importance of reaching a deal. “Maintaining the healthy and stable development of China-U.S. relations is in the fundamental interests of the two peoples and is widely expected by the international community,” Xi said, per the New China news agency. Negotiations are scheduled to continue new week in Washington.

There is reason to be optimistic over these developments, but the underlying cautionary tone is more than warranted. The US is demanding major structural reform from China and cracks in their economy are only adding to the pressure. Some of the key points of contention have to do with preserving the intellectual property of US technologies for US companies looking to tap the large Chinese consumer base. The Chinese government has also gradually been taking steps to address credit risk in the country’s financial sector by curbing risk behavior such as shadow banking and other risky lending practices that are threating the economy’s stability. The bottom line is, there are a lot of complexities to consider and a methodical approach is needed to avoid a hard landing which would have global ramifications.

Personal Capital Introduces a New Private Equity Offering

For clients with at least $5 million invested with Personal Capital, we are excited to now be able to offer a simple, cost efficient way to participate in private equity as part of a holistic financial plan. Investing in private equity can offer benefits such as higher return potential and increased diversification. It is a complex asset class, which is one reason why we strongly believe in the importance of our fiduciary approach focused on client outcomes.

Historically, private equity has been limited to large institutional investors, but new technologies have enabled us to bring access to this asset class to more people. We recognize that this option is still unavailable to the vast majority of investors, including many of our clients, and hope to be able to offer something similar to more people over time.

If you are interested in learning more about this opportunity or any of the ways we are helping people improve their financial lives, schedule a call with a Personal Capital advisor through our online scheduling app!

Schedule a call with a Personal Capital Advisor.

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