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November 2019 Market Review

-Darren Leavitt, CFA

US equity markets crushed it in November with substantial gains across all the major indices.  Record highs were inked for the S&P 500, up 3.4%, the Dow, up 3.72%, and for the NASDAQ, which gained 4.5% over the month.  The Russell 2000 hit a 52-week high after gaining 3.97%.  Optimism over the possibility of an initial trade accord with China hailed as “Phase One,” coupled with some encouraging economic data helped markets extend what has been a great year so far for US equities.  The S&P 500 is up over 25% for the year.  Employment continues to be healthy which has continued to support the consumer who has been the cornerstone for the US economy.  Manufacturing and Services data were also supportive as both data sets were better than the prior month’s readings.  Q3 earnings reports continued to filter in and were generally viewed as better than expected. Roughly 80% of companies that have reported have beat Wall Street’s estimates, although earnings growth has been anemic when compared to results from the third quarter a year ago.

Developed international markets also performed nicely with the MSCI EAFE, increasing 1.13% for the month.  Emerging markets lagged its counterparts with a loss of -0.09% partly due to China’s market losing -0.51% over the month. Weaker than expected economic data, along with the continued violent protests in Hong Kong, likely hindered Chinese market performance.  Industrial production in China grew at 4.7% but came in much worse than the prior months reading of 5.8%.  Additionally, China’s industrial profits fell the sharpest in over eight years.  Retail sales in the region have also been a source of concern, as recent data suggest a significant slowdown.

Global bond yields generally increased in November.  The US 2-year note yield increased eight basis points to close at 1.60% while the US 10-year bond yield rose by nine basis points to close at 1.78%.  It was relatively quiet on the Central Bank front.  The US Federal Reserve reiterated that its current Monetary Policy is appropriate and that it is in a wait a see mode for now.  In Europe, the ECB’s new president, Christine Lagarde, took the helm.  She is the former head of the International Monetary Fund and comes into the position with quite a few headwinds facing the economies of the EU.   UK elections are set for the second week of December and are widely viewed as a proxy for the outcome of Brexit.

Gold lost much of what it had gained in the prior month as safe-haven assets were out of favor.  Gold lost just under 3% or $44 to close at $1470.40 an Oz.  Oil had a slight gain for the month with WTI up $1.24, closing at $55.42 a barrel.

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