Price Return Last Week
S&P 500 (1.0%) S&P Mid Cap (1.1%) Russell 2000 (0.9%)
MSCI EAFE +0.8% MSCI EM +0.3%
10 Yr US Treasury Rate – fell from 4.62% to 4.57%
Source: Refinitiv Eikon
Recent News
Tariffs – Over the weekend the Trump administration enacted 25% additional tariffs on Mexico and Canada and 10% additional tariffs on China. Canadian energy imports will see a lower 10% tariff rate instead of 25%. The tariffs are set to take effect on Tuesday barring any changes. If the tariffs take effect, it is estimated that they will raise approximately $150 billion in revenue on an annual basis, approximately 5 times as large as the 2018-2019 tariffs. This would be roughly equivalent to a 10-11 percent increase in the corporate tax rate. President Trump invoked the International Economic Emergency Powers Act to launch these tariffs, which has never been used in this manner before and is likely to face legal scrutiny in the coming days.
Source: The Wall Street Journal, Strategas
Chinese AI Model – A Chinese artificial intelligence company released an AI model that appeared to perform similarly to top U.S. models. This appeared to be a surprise to the market as the U.S. has implemented export controls on sending the highest performing chips to China, thus many thought it would be impossible to achieve the level of advancement now apparent. The Chinese company noted that they were able to find shortcuts to train the AI model that required fewer chips and resources. This caused the stock market to fall and erased nearly $1 trillion in value in one day. Many have indicated that they are suspect of the claims made by the Chinese company.
Source: The Wall Street Journal
GDP – Q4: 2.3% (Reuters Poll est. 2.6%) Q3: 3.1% Growth moderated from the third quarter but remained above policymakers forecasted long-term average of 1.8%. Personal consumption remained strong, growing at an annual rate of 4.2% in the quarter.
Source: Thomson Reuters, Refinitiv Eikon
Fed Meeting – The Federal Reserve chose not to adjust rates at its January policy meeting. This followed three consecutive cuts starting in September. In comments after the meeting, Fed Chair Jerome Powell stated that interest rates are now “significantly less restrictive” than before and “we do not need to be in a hurry to adjust our policy stance.” Expectations for a cut at the next meeting in March declined slightly after his comments.
Source: The Wall Street Journal, Refinitiv Eikon
ECB Meeting – The same day that the Federal Reserve chose to keep rates steady, the European Central Bank lowered their key interest rate by a quarter point to 2.75% to 3%. Widening the difference between U.S. rates and ECB rates to 1.5%. While overall inflation in Europe has been less than the U.S., growth has stagnated. A trade war with the U.S. would heavily impact the export-driven economy with some estimating a 10% tariff on eurozone imports to lower economic growth by 0.5%.
Source: The Wall Street Journal, Refinitiv Eikon
Grip It, Rip It, and Sip It – The Wealth Management Phoenix Open kicks off on Thursday at TPC Scottsdale. The tournament is known for having the most rambunctious crowd on the PGA Tour. The legacy of the Phoenix Open began in the 90’s when Phil Mickleson started playing in the event. Mickleson had spent time at Arizona State and would garner a huge audience of young partygoing fans that would crowd the hillside of the 16th hole, now known as “The Party Hole.” The reputation of the 16th would be raised when Tiger Woods hit a hole in one there in 1997 and fans went wild.
Source: Phoenix Magazine
Upcoming Events
2/3 – S&P Manufacturing PMI, ISM Manufacturing PMI, Notable Earnings Reports: Palantir
2/4 – Job Openings, Notable Earnings Reports: Merck, PepsiCo, Pfizer, Amgen, Alphabet, Match Group, Chipotle
2/5 – ISM Non-Manufacturing PMI, Notable Earnings Reports: PayPal, Illinois Tool Works, Bunge, Disney, Uber, Cognizant Technology, MetLife, Qualcomm, Ford, Allstate
2/6 – Notable Earnings Reports: Linde, Honeywell, Air Products and Chemicals, Becton Dickinson, Bristol-Myers Squibb, Borgwarner, Intercontinental Exchange, Eli Lilly, ConocoPhillips, Amazon, Expedia
2/7 – Jobs Report, Consumer Sentiment, Notable Earnings Reports: Fortive
Source: Refinitiv Eikon
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