November 3, 2015 - Market Update
Week in Reviewif you haven't heard, last week Congress managed to not only create and pass a budget deal to raise the debt ceiling, but got it signed into law. The deal covers the Federal budget through Mid-March of 2017.
Asian markets have rebounded recently and are headed for their best month in more than six months, mainly based on investor hopes that the central banks of the world will inject stimulus into their struggling economies. However, on Friday the Bank of Japan released its decision to keep its monetary policy unchanged, which has left some investors weary.
On Sunday, The China Federation of Logistics and Purchasing released the October numbers for its manufacturing Purchasing Managers Index (PMI) which remained unchanged from previous months. This is now the third month that this economic indicator has remained below the 50 mark despite China stimulating their economy with a massive infusion of cash.
The PMI composite indicator provides an at-a-glance view of the overall manufacturing activity in China and is considered to be a leading indicator by economists. Leading indicators are metrics that generally change before those same changes are felt in the overall economy. In the case of the Chinese manufacturing PMI, a number below 50 generally indicates that there is a contraction in the Chinese manufacturing economy, which can, and generally does, have broader implications.
In an interesting move, some retailers, like GameStop Corp, Staples, and REI, are closing their stores Thanksgiving to give the holiday off to their employees. In a story reported by the Wall Street Journal, store executives say that the move was in response to employee's request to have the holiday off as well as customers who are "fed up with the mayhem" and shop online instead.
A Look at The EconomyAs we near the holiday season it is easy to forget the volatility we have experienced over the last year. A feared collapse of the European Union, a devaluation of the Chinese Yuan, a crashing commodities market, Oil prices halving and continuing their downward trend, an indecisive Fed, ISIS, a Civil war in Syria, and the Crimea crises are among just a few of the events that have shook the markets this year. While we all hope and pray that the current upward trends of the market remain, it is important to have a defensive strategy in place that is designed to protect your assets from catastrophic market losses, like what weve seen in 2002 & 2008.
The chart above shows Year to Date and 1 month returns for various indexes. Returns shown in percent and include income. The information is sourced from Bloomberg L.P.
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