Control Freak
Doug Walters
As investors, there are some things we can control and others we cannot. With uncertainty rising, stay focused on what you can control…
Contributed by Doug Walters , ,
Stocks almost made it through the week unscathed but fell victim to the U.S.-China trade dispute once again on Friday. Following an announcement by China of additional tariffs, Trump ordered U.S. companies to start looking for alternatives to China. The heightened rhetoric, combined with attacks by the president on the independent Federal Reserve, stoked investor concerns that a resolution may not be close.
As investors, there are some things within our control and others over which we have no influence. The trade dispute is the latter. Looking back over the past decade, we were regularly facing a looming crisis threatening to bring down the recovery. We loved to give these pain points clever names… Taper Tantrum, Brexit, the European Sovereign Debt Crisis (okay – that name was not that clever). Yet over the past 10 years, the S&P 500 has produced a total return of over 250%! Sitting on the sidelines, or overreacting every time uncertainty rears its ugly head, is a recipe for long-term underperformance. Do we know how this trade war will end? No. That is out of our control and unpredictable. But we do know we have done what we can to position our portfolios for long-term success.
Headlines this Week
Huawei
The White House gave Huawei Technologies a 90-day extension to continue doing business with U.S. companies. Huawei Technologies, a Chinese telecom giant, was placed on the export blacklist in May after the White House expressed some concerns regarding national security.
Fed Minutes and Jackson Hole
On Wednesday, Fed officials reiterated that July’s rate cut is not the beginning of a lengthy monetary easing policy. However, during the Fed’s Jackson Hole event on Friday, Fed Chairman Jerome Powell said that the Fed is watching trade conflict between the U.S. and China and will be flexible with the monetary policy and respond accordingly.
Chinese Tariffs
China announced that they are imposing retaliatory tariffs on $75 billion in American goods to take effect on September 1st. In addition, on December 15th China will slap American automobile producers with a 25 percent tariff and 5 percent tariff on auto parts.
The Week Ahead
Focus this week will be on the G7 Meeting taking place in Biarritz, France.
- Experts will be watching to see what type of discussion will take place around current issues, including the U.S./China Trade War.
- The stated theme this year is “Fighting Inequality,” and as such, host nation France has invited several other countries to attend the meeting, including Australia, Egypt, and South Africa.
- President Trump has voiced support for readmitting Russia into the group to re-form the G8 but has not received support from the other member countries.
In the U.S., the Personal Consumption Expenditure figures will be released for the 2nd quarter.
- The PCE is a measure of price changes in consumer goods and services.
- Unlike the Consumer Price Index (CPI), the PCE counts both urban and rural demographics in its calculations.
The U.S. will also release its second, and more official, GDP numbers for the 2nd quarter.
A couple of our portfolio companies release earnings next week, including Dollar Tree, Inc. (DLTR) and Ulta Beauty, Inc.(ULTA).
- Analysts expect Ulta Beauty to perform well this quarter on the back of strong online sales.
About Strategic
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets of over $1.8 billion.
OverviewDisclosures
Strategic Financial Services, Inc. is a SEC-registered investment advisor. The term “registered” does not imply a certain level of skill or training. “Registered” means the company has filed the necessary documentation to maintain registration as an investment advisor with the Securities and Exchange Commission.
The information contained on this site is for informational purposes and should not be considered investment advice or a recommendation of any particular security, strategy or investment product. Every client situation is different. Strategic manages customized portfolios that seek to properly reflect the particular risk and return objectives of each individual client. The discussion of any investments is for illustrative purposes only and there is no assurance that the adviser will make any investments with the same or similar characteristics as any investments presented. The investments identified and described do not represent all of the investments purchased or sold for client accounts. Any representative investments discussed were selected based on a number of factors including recent company news or earnings release. The reader should not assume that an investment identified was or will be profitable. All investments contain risk and may lose value. There is no assurance that any investments identified will remain in client accounts at the time you receive this document.
Some of the material presented is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Strategic Financial Services believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
No content on this website is intended to provide tax or legal advice. You are advised to seek advice on these matters from separately retained professionals.
All index returns, unless otherwise noted, are presented as price returns and have been obtained from Bloomberg. Indices are unmanaged and cannot be purchased directly by investors.