Weekly Market Update July 22, 2019

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What happened?    

·  It was a difficult week for equities in North America.  Although the three major American indices touched new all-time highs, equity indices and the Canadian dollar finished lower.

o  The price of oil suffered a one-week drop of nearly 8%, due to higher U.S. reserves and increased Russian production levels. Despite the heavy loss last week of $4.50/barrel for West Texas Intermediate, the price of oil has surged over 22% in 2019.  Only the NASDAQ has performed better this year.

§  The Energy sector of the TSX dragged the overall index downward. Thankfully, the overall loss was negligible at one-hundredth of a percent, far less than the losses suffered in the U.S.

o  President Trump continued to threaten the hoped-for trade deal between the U.S. and China, and his remarks reduced the optimism for a conclusion to the dispute.

o  Two additional contributors to the U.S. stock market decline is the diminished corporate results that are beginning to be reported for the most recent quarter and some new doubt that the Federal Reserve may not cut its benchmark rate in July. https://www.wsj.com/articles/why-weak-corporate-earnings-dont-signal-a-weak-economy-11563631200

·      Recent volatility from political tensions, dubious corporate performance, monetary policy and strengthening economic growth should remind all investors to keep index performance in perspective.  The value, predictability, liquidity and risk levels of an individual’s portfolio are far more important than the overall market or any index’s short-term gain or loss.

What’s ahead for this week?

·      In Canada, in will be a light week for economic releases as the quarterly earnings season builds on both sides of the border. Wholesale trade figure for May the sole indicator of note scheduled for release.

·      In the U.S., new and existing home sales and durable goods orders for June will be released along with quarterly results for almost 150 firms in the S&P 500 and 10 of the Dow’s 30 firms.