Week of Oct 18 2019 Weekly Recap & The Week Ahead
“Big money is made on the stock market by being on the right side of major moves. The idea is to get in harmony with the market. It’s suicidal to fight trends. They have a higher probability of continuing than not.” – Martin Zweig
1. Stocks’ Path Toward Records Led by Defensive Plays — much of the gains over the past month have been driven by parts of the market that investors tend to gravitate toward when they are looking for safety, as well as an attractive yield. The S&P 500’s real-estate and utilities sectors, often considered bond-like because of their relatively hefty dividend payouts, have climbed 1.3% and 1.9% respectively over the past month while the broad index has fallen 1%. That makes them by far the best-performing groups in the broad index over that time, followed by technology shares. Exchange-traded funds that aim to minimize investors’ exposure to market swings have also gained popularity, with flows into low-volatility equity ETFs surpassing $20 billion this year—nearly 20 times that of growth stocks, according to Strategas.
2. The U.S. Imposed Sanctions and Raised Steel Tariffs on Turkey — President Trump threatened harsher financial penalties if Turkey continued its offensive in northern Syria, launched after he decided to withdraw U.S. troops from the region. The withdrawal decision was widely criticized on Capitol Hill for leaving Kurdish militias—allies in the U.S.-led fight against Islamic State—open to attack. Mr. Trump also spoke with Turkish President Recep Tayyip Erdogan, calling on him to stop the invasion and negotiate an end to the violence, Vice President Mike Pence said late Monday.
3. U.K., EU Agree on Draft Brexit Deal — Britain and the European Union agreed to new terms for the U.K.’s exit from the bloc late last week, paving the way for a high-stakes vote in the British Parliament.Following days of intense talks more than three years after Britain voted to leave the EU, the two sides struck a compromise intended to ensure a border doesn’t appear on the island of Ireland. It was the main sticking point in negotiations aimed at smoothing Britain’s split with its largest trading partner.
4. UAW Reaches Tentative Labor Deal With GM — the United Auto Workers struck a tentative labor deal with General Motors Co. GM -1.26% on Wednesday, a critical step in ending a monthlong strike that has brought more than 30 GM factories in the U.S. to a standstill. As part of the new deal, GM has committed to invest around $7.7 billion in its U.S. factories over the four-year contract period, which would create or preserve about 9,000 jobs, according to people familiar with the agreement. The company also separately has joined with outside companies to invest another roughly $1.3 billion in facilities near its Lordstown, Ohio, assembly plant, which the company hopes to sell to a startup electric-truck maker, the people said.
The week ahead — Economic data from Econoday.com:
