The Markets
The world remains full
of opportunities and challenges.
Although we’ve seen
global markets moving in tandem in recent years, Sara Potter of FactSet pointed
out, “…we’re starting to see the end of the synchronized global growth that has
prevailed over the last two years. While the U.S. economy remains strong,
growth in Europe and Japan is moderating, and emerging markets are under
increasing economic and financial market pressure.”
Strong economic growth
and robust earnings helped U.S. stocks significantly outperform other regions
of the world during the third quarter of 2018. In addition, the resolution of
some trade tensions, namely the signing of a United States-Korea trade deal and
the renegotiation of NAFTA (North American Free Trade Agreement), helped soothe
investor concerns, reported Jeffrey Kleintop of Schwab.
The trade relationship
between the United States and China, however, remains an itchy rash marring the
outlook for economic growth in both countries. The Economist Intelligence Unit
reported:
“Since the start of
2018 trade policy has become the biggest risk to The Economist Intelligence
Unit's central forecast for global economic growth. We now expect this risk to
materialize in the form of a bilateral trade war between the United States and
China, with negative consequences for global growth…The trade war comes at a
challenging time for the Chinese economy…The trade war will also affect the
U.S. economy…the escalating trade dispute with China will start to weigh on
growth later in 2018 and into 2019 – we now expect growth to slow in 2019 to
2.2 percent (2.5 percent previously). The U.S. manufacturing and agricultural
sectors, in particular, will be hit by the trade dispute, and rising interest
rates will cause private consumption to slow.”
China’s economic
growth slowed during the third quarter. The nation experienced its slowest
growth since 2009, reported Reuters.
Chinese stock markets
generally lost value. However, some Chinese indices performed better than
others, depending on the type of stocks included in the index. For example, the
MSCI China Index, which measures large- and mid-cap stocks of various share
types that trade on the mainland and in Hong Kong, was down 8.45 percent during
the quarter.
In contrast, the MSCI
Red Chip Index, which is comprised of stocks that are incorporated outside of
China, trade on the Hong Kong exchange, and are usually controlled by the state
or a province or municipality, was up 3.25 percent for the quarter and flat
year-to-date.
Emerging markets were
weak performers overall during the third quarter, but there were bright spots.
Schroders explained, “Turkey was the weakest index market amid a sharp sell-off
in the lira…By contrast, Thailand recorded a strong gain and was the best
performing index, with energy stocks among the strongest names. Mexico
outperformed as the market rallied following general elections and an agreement
with the United States on NAFTA renegotiation. Taiwan, where semiconductor
stocks supported performance, also outperformed. Despite ongoing risk of new
U.S. sanctions, Russian equities also finished ahead of the benchmark,
benefiting from crude oil price strength.”
Political strife
continued to hamper the European Union and the United Kingdom during the third
quarter. Overall company profits weren’t particularly impressive in the region
and neither was economic growth, reported BlackRock.
As the third quarter
came to a close, Barron’s conducted its Fall Big Money Poll. Vito Racanelli
reported almost two-thirds of professional money managers from across the
country said the U.S. stock market was fairly valued – and that was before the
market slid lower early in the fourth quarter. While the money managers’
assessment doesn’t mean all U.S. stocks are fairly valued, there may be
opportunities to invest in sound companies at attractive prices.
NEW TREND: PETS AND FINANCIAL PLANNING.
Animals have played important roles in human lives for centuries. They provide companionship, comic relief, work assistance, transportation, reassurance, protection, and food.
Today, emotional-support and service animals may be found in workplaces, beauty salons, cafes, theaters, airplanes, and many other places where our parents or grandparents would have been surprised to find them. Landlords charge pet rent, and some service animals qualify as a medical expense under Internal Revenue Service rules.
It is also becoming more and more common for pet owners to include pets in their financial planning goals. While you cannot leave your pet property, you can make arrangements to have your pet cared for after you are gone.
Last week, The Economist reported, “Two-thirds of all horse owners in America have made some provision in their wills for their pets, according to a survey by the American Pet Products Association. Over a third of American pet owners say they would pay for animal-related expenses by putting less into their retirement accounts. And, three-quarters of those buying a home said they would turn down an otherwise ideal property if it did not meet their animal’s needs.” In addition, pets can become beneficiaries of trusts.
Whether you think the idea of providing financial support for pets is silly or you wholeheartedly embrace it, the role of animals in the lives of many Americans is changing.
Weekly Focus – Think About It
“Animals are such agreeable friends - they ask no questions; they pass no criticisms.”
--George Eliot (a.k.a. Mary Anne Evans), English Novelist
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