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Weekly Market Digest: Fed Maintains Positive Outlook

On Friday, President Trump announced flexibility on extending the March 1st deadline on the current trade deal with China. Over the past several months concerns over the impact of an escalating trade war with China have frequently infused volatility into the equity markets. As markets tend to value stability, or at least a lack of sudden surprises, this news helped the US markets climb a bit higher this week.

Also, this week the US Federal Reserve released a report indicating that the Fed continues to maintain a positive outlook on the US Economy. The report called out signs of positive economic growth, such as a resilient financial system with historically high liquidity ratios (when compared to pre-2008 conditions), continued low unemployment, and overall healthy consumer debt. The report also had some potential negative data points in it, such as ’debt owed by businesses’ which the fed considered ‘high.’ For those of our readers looking for a thrilling 73 pages, the report can be found here.

Weekly Returns

S&P 500: 2775.6 (0.6%)
FTSE All-World ex-US(VEU): (1.3%)
US 10 Year Treasury Yield: 2.67% (0.0%)
Gold: $1,330 (0.6%)
EUR/USD: 1.134 (0.3%)

Major Events

  • Monday – US Markets closed in observance of Washington’s Birthday, also known as Presidents’, President’s, or Presidents Day depending on the state in which you reside.
  • Tuesday – Bernie Sanders announced his intent to run for president as a Democrat in the 2020 elections.
  • Wednesday – Vladimir Putin, in his annual national address, announces that Russia will soon be launching an unmanned, nuclear submarine.
  • Thursday – The Wall Street Journal reports that Apple and Goldman Sachs plan to release their joint credit card later this year.
  • Friday – Kraft Heinz Company was down by over 25% on the reporting on an SEC investigation into its accounting practices, a reduced dividend down to $0.4/share from $.625/share, and write downs on some of its brands.

Our take

A particularly interesting point this week was news that Deutsche Bank, a German bank based in Frankfurt, lost over $1.6 Billion dollars on a single investment ‘bet.’ The loss, which was reported by the Wall Street Journal to be about 4 times the company’s 2018 profit, brings to mind a key concept of Personal Capital’s investment philosophy: diversification.

If you have a concentrated position in your portfolio, consider giving it a second look this weekend, and asking yourself how you’d react if that position dropped significantly in value.

Read More: Market Commentary

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