December 2019 Financial Markets Summary

Last month we discussed how the consumer has really driven the economy in 2019.  Based on the recent sales data, the consumer doesn’t appear to be slowing at all.  According to the Wall Street Journal, “shoppers increased their spending by 16% over the five-day shopping period between Thanksgiving and Cyber Monday compared to last year.”  The National Retail Federation estimates that on average individual consumers plan to spend about $1,000 each this year for the holidays.

By no surprise, the major shift to online shopping has continued.  The National Retail Federation noted that “Black Friday drew more online shoppers than Cyber Monday for the first time in history.”  This trend has really put pressure on the brick and mortar retailers.  Over 30 major retailers have declared bankruptcy in the past three years, and longstanding names are struggling to remain viable.  Macy’s, J.C. Penney, Nordstrom, Gap, Foot Locker and L. Brands stock values have all declined by at least -20% over the past year.  This looks especially poor relative to the S&P 500 13% gain.

Online shopping has become almost too easy.  All you need is your computer, tablet or even smartphone and the product shows up on your doorstep within a few days.  However, recent studies have been warning consumers to not always believe the supposed five-star reviews.  Fakespot Inc. recently reported that “more than a third of online reviews on major websites, including those of Amazon, Walmart and Sephora are fake, meaning they are generated by robots or people paid to write them.”  They urged consumers to check multiple website reviews before making purchases.

Even with the uncertainty regarding trade tensions, slowing global growth and politics, the consumer doesn’t appear to be concerned.  The solid wage growth and low interest rates continue to strengthen consumer confidence, spending and the economy.

We wish you and your families a safe and happy holiday season and a prosperous new year!

Asset Index Category Category Category 5-Year 10-Year
3 Months 2019 YTD Average Average
S&P 500 Index – Large Companies 7.3% 25.3% 8.7% 11.1%
S&P 400 Index – Mid-Size Companies 6.8% 20.9% 6.9% 11.4%
Russell 2000 Index – Small Companies 8.7% 20.5% 6.7% 10.9%
MSCI ACWI – Global (U.S. & Intl. Stocks) 7.5% 21.2% 7.2% 8.4%
MSCI EAFE Index – Developed Intl. 7.8% 18.2% 4.2% 5.3%
MSCI EM Index – Emerging Markets 6.1% 10.2% 3.1% 3.3%
Short-Term Corporate Bonds 0.3% 4.4% 1.9% 2.1%
Multi-Sector Bonds -0.3% 8.8% 3.1% 3.6%
International Government Bonds 1.4% 5.8% 1.7% 1.3%
Bloomberg Commodity Index 0.6% 2.5% -6.3% -5.0%
Dow Jones U.S. Real Estate 1.7% 27.7% 8.3% 12.6%


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