U.S. equity benchmarks all moved lower on the week as uncertainty on many fronts continued.
All major indices lost at least 1% with the exception of the Nasdaq which was down 0.84%.1
The small-cap tracking Russell 2000 led to the downside at -2.57%.1
S&P 500 sub-sectors were almost all lower last week.
Utilities was the only positive sector with a gain of 0.64%.1
Financials & Energy led to the downside with losses of over 3%.1
The CBOE Volatility Index (VIX) lost 7% to end the week at 21.63. 1
US Treasury yields moved slightly higher last week except for the 30yr which was flat.1
The recent demand for US Treasuries seemed to cool off a bit last week.
Foreign bond yields were mostly unchanged in Europe & Asia.1
Commodities as an aggregate asset class lost 2.5% last week.1
WTI Crude closed at $51.20, down 2.7%.1
Gold declined 0.90% and failed to break over the critical $1,250 level.1
The US Dollar index gained 1%.1
In our opinion, U.S. economic data was mixed on the week.
Job openings now exceed total unemployed pointing to a strong labor market.1
Small business optimism sank to the lowest level in 7 months.1
Declining energy prices kept inflation measures subdued.1
An index of equities outside the U.S. (MSCI EAFE) was down albeit less than its US peers.1
US equity indices all sank in the week that was.
We believe continued uncertainty surrounding future economic growth, trade, politics, and the path of interest rates kept many buyers on the sidelines.
The S&P 500 lost 1.3% while the Nasdaq led domestic indices with only a 0.84% decline.
The S&P 500 ended the week at its lows of 2018.2
We’d like to point out that this corresponds with what has transpired in the small-cap tracking Russell 2000 which broke through its 2018 lows and has further extended its decline since.
The Russell 2000 led to the downside last week.2
S&P 500 sub-sectors were all lower on the week with the exception of Utilities.
Utilities was the only positive sector with a gain of 0.64%.
Utilities are up roughly 15% over the last 6 months while the S&P 500 index is down more than 6.5%.2
Financials & Energy led to the downside with losses of over 3%.
We’ve discussed these 2 sectors and our concern relating to them for some time and are happy to have not had any direct exposure to them since June.
Equities traded outside of the US decreased as well last week, albeit much less than domestic markets.
This continued a recent trend of Int’l equity outperformance.2
This has happened despite the on-going strength of the US Dollar & political drama unfolding in the major developed countries of the UK and France.
The US Dollar hit a 19-month peak last week.2
We believe that if the unemployment rate rises/normalizes, it could put pressure on the current US fiscal deficit which would in turn weigh heavily on the US Dollar.
In our opinion, this could present an opportunity for non-US equity investments to continue with their outperformance witnessed recently.
Recent data shows that the reduction of Central Bank liquidity from around the globe has picked up steam in 2018 and is projected to move into negative territory in 2019.2
As a reminder, this was one of our major themes of the last 18 months and we believe the global markets have heavily priced in this new reality.
In our opinion, while the media attention may start to focus on this fact, global fiscal stimulus restarting and emerging market reforms picking up steam could be on the horizon next year.
Ryan A. Mumy, CFP®, AIF®
Chief Investment Officer
Contact:828/855-9400 or info@CIASonline.comor firstname.lastname@example.org
 Source: Bloomberg – 12/14/2018
 Source: Bloomberg – 12/14/2018