The third quarter of 2019 (blue) was a mix. Large US companies, real estate and bonds had good returns. Small US companies continued to struggle along with international. Bonds had a good return, particularly for the year (red). Overall the combined 60/40 theoretical portfolio has modest returns for all three periods.
Trading with China, Mexico and Canada - Much of the discussion in the news deals with international trade, particularly China. Below is s chart from the US Census Bureau through August 2019 that shows the percentages of the US three major trading partners.
The imports from China as a percentage are nearly three times our exports. The US is a major importer of Chinese goods. Our trade (deficit) with China is -$232 billion through August 2019. From a recent article in Barron’s, our trade agreements with Canada and Mexico are not final. It seems the US needs to focus on getting signed agreements with our top three, not only China!
What’s ahead for the market – The Fed decreased rates by .25% this quarter and is expected to decrease rates another .25% by the end of October. With the 10-year Treasury yielding about 1.7% currently, the effective yield after inflation and taxes is negative. This bodes well for equity investors, not so much for savers.
The US continues with low unemployment, and positive corporate earnings, albeit at lower rates. Much of the world’s economy is slowing. There are daily articles about an impending recession. The political environment in Washington is hostile, but it seems to have been this way through three presidents, Bush, Obama and now Trump. The melody is similar but the lyrics are different.
We will continue to keep your portfolios diversified and as the holidays are rapidly approaching, we want to thank you for your continuing support for our family practice.
In Karen’s Corner:
Holiday Spending – If you’ve been sticking to a budget every month, shopping for gifts might not be in your budget right now. Set aside a bit more each month starting now, and you’ll be in better shape for gift-giving and entertaining in December.
Review Accounts – Go through your checking account statements and get re-acquainted with your monthly subscriptions and auto-pay services. If you already review each month’s statement when it’s issued, good for you! Make sure you review your credit profiles at the three reporting bureaus on a regular basis, too.
“In-house” Credit Cards – consider keeping a low-limit card open that you use exclusively for auto-debited expenses such as your subscription deliveries, streaming services, etc. Keep this card in a desk drawer. If you ever have to replace the card you carry and use for groceries, restaurants and gas, you won’t have the added headache of updating all those services.