GOOD WILL: Both the U.S. and China made showings of good will last week. The U.S. delayed a new round of tariff increases on $250 billion of Chinese imports that would have begun on October 1. China responded by lifting a punitive tariff on various U.S. agricultural products. These are relatively limited gestures, and we will have to watch and see if the goodwill is fleeting or lasting.
WE JUST KEEP SHOPPING: The retail sales figures for August are in, and they surprised to the upside. The value of overall sales rose 0.4% from the prior month, led by motor vehicles and online purchases. August sales were 4.1% higher than one year ago. As long as spending continues like this, it will support a moderate pace of economic growth.
STOCKS RISE: Investors have been preoccupied with the relationship between the U.S. and China, and the up and down drama associated with that trade relationship. So, to no one’s surprise, news about this issue drove U.S. markets once again. This time, it was moderating tensions between the U.S. and China that eased fears about recession and caused U.S. stocks to register gains for the third week in a row. Positive data regarding U.S. retail sales (see above) also helped run markets higher. The S&P 500 is now within 0.6% of its all time high again.
WILL THEY OR WON’T THEY?: The Fed meets September 17-18. The general belief is that the Fed will announce another rate cut. Fed Chair Jerome Powell said last week that he was not forecasting a recession, but he emphasized that the Federal Reserve will continue to act “as appropriate” to keep the expansion on track.
WATCH OIL PRICES: Over the weekend, Yemen’s Houthi rebels conducted drone attacks on Saudi Arabian oil fields. It may take weeks for the country to return to full oil production. The Saudi Arabia stock market is falling over the weekend (it is open on Sunday). Watch for rising oil prices. If the damage is repaired quickly, and there are no more attacks, the affect could be limited. If it takes a while analysts are predicting as much as a $10 per barrel rise.
STRESSED OUT ABOUT MONEY: In a recent survey of Americans aged 25-45, 39% say financial stress has had a negative impact on their health. 35% say financial stress has harmed their relationship with a spouse or “significant other”. 26% said it has affected their performance at work. Compounding the problem is that the cost of health care has prevented these people from getting the help they need to treat these medical issues. Three quarters of respondents stated that they have either delayed seeking medical help (hoping their condition goes away), avoided help altogether due to the high deductibles, or scheduled an appointment and not shown up for fear of the resulting bill. In a similar survey, 69% of Americans over 50 with at least $50,000 in investable savings admitted that one of their top fears in retirement is accumulating too many medical bills. These surveys were conducted by Nationwide Retirement Institute.