Market News – Week of September 11th, 2017

LOW GRADE ANXIETY:

Some anxiety re-entered U.S. markets this week and caused a small decrease in stock values for the holiday-shortened week. What caused the anxiety? A Federal Reserve official warned about persistently low inflation potentially getting in the way or “normalizing” interest rates. The threat of devastation from Hurricane Irma, in the wake of Harvey, jolted the markets a bit. Of course, nuclear saber rattling from North Korea continues to cause jitters. For the week, the S&P 500* decreased 0.62% (up 9.94% for the year). The MSCI All Country X US* increased 0.56% (up 18.81% for the year). The Barclays Global Aggregate Bond Index* increased by 1.07% (up 8.28% for the year). The HFRX Global Hedge Fund Index* increased 0.03% (up 3.99% for the year).

CHINA EXPORTS GROWING:

Many investors are keeping an eye on China, as any major jolt to such a huge economy will have a negative impact on the economies all over the world. Some good economic news from China was announced last week in that China’s exports last month came in at 5.5% higher than a year earlier. Most economists believe that these results, and the results from the last several months, are good enough to help prop up growth in China. In 2016, Chinese exports declined 7.7% and they are on pace for more than 5% growth this year.

DEMOGRAPHICS SHOULD SUPPORT ECONOMIC GROWTH:

The prime working age population is defined as those between 25 and 54. The amount of people in this category in the U.S. peaked in 2007, and then decreased until the end of 2012. As of August 2017, there were still fewer people in the prime working age population in the U.S. than in 2007. This age group grew rapidly in the ’70s, ’80s, and ’90s, supporting significant economic growth. This age group should start growing by about half a percent per year which should boost economic activity.

EQUIFAX DATA BREACH:

News emerged on Thursday and Friday that hackers got into Equifax. This might impact up to 143 million U.S. customers, or about two thirds of the adult U.S. population. The data breaches occurred from May through July and hackers were able to access items such as Social Security numbers, driver’s license numbers and credit card numbers. Equifax detected the breach on July 29. Equifax has created a website where you can enter your last name and the last six digits of your Social Security number to determine if you are impacted (https://www.equifaxsecurity2017.com/potential-impact/). If it says that you have been impacted, then your data is out there and probably for sale. Equifax is offering some sort of credit monitoring, which probably makes sense to utilize. Unbelievably, Equifax was trying to get you to agree to opt out of the inevitable class action lawsuit to get this service. After pressure from state Attorneys General, Equifax stopped trying to do that. The Federal Trade Commission suggests that one way to protect yourself is to freeze your credit. To do this, you must contact the four different bureaus (Equifax, Experian, Innovis, and Trans Union). Some might charge a fee. You will have to create (and remember) a PIN in order to unfreeze your credit in the future (such as when you want to finance a car, get a student loan, etc.).

IN CASE THAT NEWS WASN’T BAD ENOUGH:

After the Equifax data breach news was released, shares of Equifax dropped over 13% on Friday. But in case you were worried that all Equifax executives were vulnerable, fret not. Three executives sold their Equifax stock, according to the SEC, after the breach was discovered internally, but before it was announced publicly. Equifax claims that the trio had not been informed of the breach before they sold their shares worth almost $1.8 million. None of these sales were prescheduled (many executives of publicly traded companies set up sales plans ahead of time to avoid insider trading accusations). It could be a coincidence.

References:

EQUIFAX DATA BREACH: http://www.marketwatch.com/story/equifax-cybersecurity-breach-potentially-impacted-143-million-americans-2017-09-07; http://fortune.com/2017/09/08/equifax-what-to-do/
IN CASE THAT NEWS WASN’T BAD ENOUGH: https://www.bloomberg.com/news/articles/2017-09-07/three-equifax-executives-sold-stock-before-revealing-cyber-hack; http://www.marketwatch.com/story/equifax-executives-sold-stock-after-data-breach-before-informing-public-2017-09-07
LOW GRADE ANXIETY: https://www.wsj.com/articles/array-of-threats-stir-up-markets-1504656393
CHINA EXPORTS GROWING: https://www.wsj.com/articles/chinese-exports-grow-for-sixth-straight-month-1504843458
DEMOGRAPHICS SHOULD SUPPORT ECONOMIC GROWTH: http://www.calculatedriskblog.com/2017/09/prime-working-age-population-near-2007.html