11/22/17 – Market Recap

Stocks Higher in Holiday Week

  • NAFTA Back in the News
  • America Creating Lots of Millionaires

I wish you all a Happy Thanksgiving filled with good food, family and friends.

The weekly recap is arriving early due to the Thanksgiving holiday. Markets will be closed tomorrow and only open half day on Friday. Stocks moved sharply higher this week, with most of the gains coming on Tuesday. So far this week, the Dow and S&P 500 are up 0.7%.

The North American Free Trade Agreement (NAFTA) was again in the press this week as the 5th Round of negotiations concluded yesterday with no real solutions. NAFTA was signed into law by the Clinton administration and has opened up markets between the US, Canada and Mexico for 23 years. The Trump administration has repeatedly threatened to leave NAFTA if we don’t get better terms in the deal. I’m a believer in free trade and global trade. I think consumers worldwide do better when products and services can be produced in the most effective and cost-efficient manner. That reality does have downsides though. Low-skilled labor in this country is much more expensive than in other countries. This can cause a lot of low-skilled employment to be outsourced to lower cost countries. That hurts parts of the US economy. However, it also benefits parts of the US economy because cheaper consumer goods means people can 1) consume more and 2) free up money to invest in other productive ventures. There is no perfect answer, but overall, I hope we stay in NAFTA and continue to be a global example of what free trade should be. Read More

A new study shows that 1 in 20 Americans are now millionaires. It’s remarkable to think that 5% of our population has a net worth in excess of $1 million. So far in 2017, 1.1 million households have become millionaires. There are now over 15 million US households with a $1 million net worth. The US accounts for roughly 5% of the global population, but has 43% of the world’s millionaires. Much of the recent gain has been from the stock market, which has continued its long bounce-back from the financial recession. Total wealth in the US now stands 30% higher than in 2006, the last full year before the financial crisis started. While some in the US have done very well, the US ranks a somewhat disappointing 21st in median net worth, with a median net worth of almost $56k. Median means half the US population has a net worth over than amount while the other half is below that amount. Switzerland leads the world in median wealth, with an impressive $230k figure. Read More

Oil declined rose this week, increasing 2.5% to close at $58.02/barrel. The yield on the 10-yr Treasury ticked lower, down to 2.32% from 2.34% last week. Freddie Mac hasn’t yet released the weekly change in mortgage rates.

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