Prepare yourself. There is a good chance markets will be volatile in the coming weeks.

 

Precautions designed to slow the spread of the coronavirus may also slow Chinese economic growth and, by extension, global economic growth.

 

On Thursday, the World Health Organization declared the coronavirus to be an international health emergency. The U.S. State Department issued a travel advisory for China, and major U.S. airlines suspended flights to the nation, reported Forbes.

 

In six Chinese provinces, factories and businesses are shuttered until at least February 10. The closures have created issues for global supply chains, and Financial Times reported, "Companies from luxury retailers to airlines and banks are reeling as the disease accelerates."

 

Events sparked a bond rally as investors shifted assets into safe haven investments. The Economist wrote that previous viruses have not had lasting effects on economic growth. "Other recent epidemics have reinforced the impression that economists should not be overly worried, so long as good doctors are on the job. Neither avian flu in 2006 nor swine flu in 2009 dimmed the global outlook. Yet even flint-hearted investors are wondering whether the new epidemic might be worse. Stocks in Hong Kong have fallen by nearly 10 percent as reported infections have steadily increased. Tremors have also rippled through global markets."

 

China's government is prepared to step into the breach. On Saturday, Reuters reported, "Chinese authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support firms affected by the virus epidemic..." The Chinese central bank is expected to begin offering support on February 3 before the Chinese stock market reopens for the first time since January 23.

 

The European Union may also be in need of economic stimulus. Financial Times reported the Eurozone economy came to a virtual standstill (up 0.1 percent) in the fourth quarter and grew just 1.2 percent during 2019. Economies in France and Italy, the second and third largest in the region, both contracted during the fourth quarter.

 

Major U.S. stock indices moved lower last week.

 

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

The Things We Do For Pets. While there is some debate about how many American households include pets - The Washington Post reports estimates from the American Pet Products Association are about 11 percent higher than those of the American Veterinary Medical Association - there is little debate about how much people love their pets.

 

With Valentine's Day coming up soon, you may be wondering how to show your pet you care. Here are a few ideas:

 

 

 

 

 

On Valentine's Day, remember to do something nice for the people you love, too.

 

Weekly Focus - Think About It

 

"The more cats you have, the longer you live. If you have a hundred cats, you'll live ten times longer than if you have ten. Someday this will be discovered, and people will have a thousand cats and live forever."

                                                                                                                                                                                                                                --Charles Bukowski, Poet and novelist

 

Best regards,

Markets hunkered down last week.

 

News of the coronavirus outbreak in Wuhan, China unsettled investors around the world. The respiratory infection is related to severe acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS), reported WebMD.

 

Previous virus outbreaks have affected global economic growth. Research into pandemic preparedness suggests extreme events can reduce global annual income by 0.6 percent per year (including mortality and income loss). Lower income often is equated with slower economic growth.

 

Viruses can also affect companies and share values. However, not every investment will move in the same direction at the same time, and not every country or industry will be affected in the same way. Barron's reported:

 

"SARS infected more than 8,000 people in 2003, killing more than 770. The outbreak occurred between November 2002 and July 2003. Stocks of U.S. airlines - a proxy for travel-related shares - dropped more than 30 percent from pre-SARS highs during that outbreak, about twice the decline of the broader S&P 500 index. All stocks, it appears, were impacted by the outbreak. It took about three months for shares to bottom and another three months to achieve previous highs."

 

China responded to the outbreak by imposing a transportation lockdown, and that could affect China's economic growth. S&P Global explained:

 

"The coronavirus is hitting China during Lunar New Year, a period when households tend to spend more on travel, entertainment, and gifts. Even if the virus is contained fairly quickly, the initial stages of high uncertainty are likely to affect spending."

 

In addition, the city of Wuhan, where the outbreak began, is a major transportation hub and a center for auto production. It is China's sixth largest city, home to 11 million people, and responsible for 1.6 percent of the country's economic growth.

 

Major stock indices in the United States moved lower last week.

 

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

a decade of words. Time Magazine puts a 'Person of the Year' on its cover. ESPN awards ESPYs to athletes annually. Nobel and Ig Nobel committees recognize the worthy and the unsuspecting. Merriam Webster selects a 'Word of the Year.' It is the word dictionary users searched for more than they had in previous years. Here are the words of the year from the last decade:

 

2010: Austerity, noun, "The quality or state of being austere, a stern and serious quality, a plain and simple quality."

           

2011: Pragmatic, adjective, "Relating to matters of fact or practical affairs often to the exclusion of intellectual or artistic matters: practical as opposed to idealistic."

 

2012: Socialism, noun, "Any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods," tied with Capitalism.

 

Capitalism, noun, "An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market."

 

2013: Science, noun, "The state of knowing: knowledge as distinguished from ignorance or misunderstanding."

 

2014: Culture, noun, "The customary beliefs, social forms, and material traits of a racial, religious, or social group, also the characteristic features of everyday existence (such as diversions or a way of life) shared by people in a place or time."

 

2015: -ism, noun suffix, "Manner of action or behavior characteristic of a (specified) person or thing, or prejudice or discrimination on the basis of a (specified) attribute." (The most looked up words were socialism, fascism, racism, feminism, communism, capitalism, and terrorism.)

 

2016: Surreal, adjective, "Marked by the intense irrational reality of a dream."

 

2017: Feminism, noun, "The theory of the political, economic, and social equality of the sexes; organized activity on behalf of women's rights and interests."

 

2018: Justice, noun, "The maintenance or administration of what is just especially by the impartial adjustment of conflicting claims or the assignment of merited rewards or punishments."

 

2019: They, pronoun, "Those ones: those people, animals, or things." The definition was expanded to, "Used to refer to a single person whose gender identity is nonbinary."

 

The short-list of words for 2019 included: quid pro quo, impeach, crawdad, egregious, clemency, the, snitty, tergiversation ("evasion of straightforward action or clear-cut statement"), camp, and exculpate.

 

Weekly Focus - Think About It

 

"We think of English as a fortress to be defended, but a better analogy is to think of English as a child. We love and nurture it into being, and once it gains gross motor skills, it starts going exactly where we don't want it to go: it heads right for the...electrical sockets. We dress it in fancy clothes and tell it to behave, and it comes home with its underwear on its head and wearing someone else's socks. As English grows, it lives its own life, and this is right and healthy. Sometimes English does exactly what we think it should; sometimes it goes places we don't like and thrives there in spite of all our worrying. We can tell it to clean itself up and act more like Latin; we can throw tantrums and start learning French instead. But we will never really be the boss of it. And that's why it flourishes."

--Kory Stamper, Lexicographer and author

 

Best regards,

 

The new trade deals are here!

 

The United States and China signed a preliminary trade deal last week. The next day, the United States-Mexico-Canada Agreement was approved by the Senate.

 

The phase-one deal between the United States and China has been analyzed, applauded, disparaged, and questioned. Here is a sampling of what's being said:

 

"The eight-part deal includes protections for trade secrets and intellectual property, mechanisms for enforceability, and commitments by Beijing to increase purchases of U.S. goods and services by $200 billion over the next two years. It also broadens U.S. companies' access to China's markets..."

-- Barron's

 

"While the deal isn't insignificant - China has promised $200 billion in purchases...The sweeping U.S. goals to change the way China's economy functions, from shrinking state-funded industries to strengthening intellectual property laws, are either absent from the deal or described in vague terms."

-- Foreign Policy

 

"A truly grand pact between the two countries is some way off - and indeed, may never arrive. But this modest trade agreement shows how much the status quo has changed. Tariffs on hundreds of billions of dollars...of imports into both countries remain in place, with an ever-present threat of more. This is not trade peace, but rather a trade truce - and a tense one at that."

-- The Economist

 

"Moreover, some countries are worried that $200bn of Chinese purchases of US goods that are part of the agreement will enshrine 'managed trade' between the world's two largest economies, possibly flouting market forces, discriminating against their companies and violating WTO commitments."

-- Financial Times

 

"One aspect that most have not addressed is that this is only a two-year agreement. What happens at the end of the two years is not defined...China has pledged to purchase $36.5 billion in ag products in 2020 and $43.5 billion in 2021. But the issues are no one believes either side will keep up their end of the bargain."

-- AgWeek

 

Despite a diversity of opinion about the deal, investors were happy. The Dow Jones Industrial Average surpassed 29,000 for the first time and was up 2.8 percent for the year through last Friday, reported Barron's.

 

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend)

and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of

the historical time periods.

Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

Culinary trends of the 2010s...The way we eat changed during the past 10 years. The Auguste Escoffier School of the Culinary Arts pointed out sales of American cheese have fallen because younger generations prefer artisanal cheeses. Unprocessed cheese isn't the only food trending last decade.

 

 

 

 

 

What is your favorite food trend from the last decade? Putting an egg on top? Meal kits? Kale? Macarons? Fermentation?

 

Weekly Focus - Think About It

"There's a rebel lying deep in my soul. Anytime anybody tells me the trend is such and such, I go the opposite direction. I hate the idea of trends. I hate imitation; I have a reverence for individuality."

                                                                                                                                                                                                                                                                 Clint Eastwood, Actor

 

Best regards,