January Investment Bulletin

Bill Norris
January 06, 2020

Stay current on what’s happening in the economy to help you better understand how the financial news relates to your investments.

Out with the old and in with the new. 

With 2019 behind us and a new year and decade ahead, there is no better time than now to commit to staying informed.

Because we often learn from the past, having the right perspective is essential to knowing how to make sense of the world around us. But with so much information out there, it is easy to get overloaded and sometimes it is difficult to distinguish between what actually warrants your attention and what is just white noise that will distract you from what matters.

Below is a recap of the key stories in December and a summary of what to watch for in January.

December Key Drivers

  • As it has for much of the year, trade dominated news in the early part of December as investors anxiously awaited the outcome of negotiations between the U.S. and China. In the end, both countries agreed to certain conditions impacting agriculture and reducing tariffs, improving trade relations heading into 2020. Investors cheered the news but remain cautious on the next round of talks, if any.
  • With its last meeting of 2019, the Federal Open Market Committee held steady on monetary policy after what could be described as a rocky past 12 months. Starting 2019 in a tightening mode, the Federal Reserve (Fed) soon pivoted and saw a need to cut rates as weakness in the U.S. economy started to show through. The Fed has signaled that it expects to keep rates firm in 2020, which will help ease concerns on the part of investors.
  • The holiday retail season got off to a fast start and ended with what appears to be record online sales and spending by consumers. If confirmed, it will continue to help support the notion that the consumer remains upbeat and able to support economic activity heading into 2020. Retailers and online sales stocks fared well in the latter half of December.

 

What to Watch in January

  • Coming off of the announcement that a phase one trade deal was reached between China and the U.S., investors will want to see the deal signed, as expected, in January. Current expectations are that the trade deal will be signed in the U.S. in early January, which would help to ease investor concerns for the time being.
  • With the execution of the trade deal and the expectations that the Senate will pass the revised North American Free Trade Agreement, it is expected that consumer and business sentiment in the U.S. will get a near-term boost that should support a stronger growth view for the U.S. economy in 2020. Economic data focused on consumer confidence, business sentiment and small-business optimism will be watched closely by investors for signs of improvement.
  • After more than three years of twists and turns in British politics, the U.K. is set to exit the European Union (EU) on January 31, 2020. Having a firm mandate, the prime minister will move forward with the exit. The U.K. will remain in the EU free-trade market until the end of 2020, while new conditions will be negotiated. Markets have factored in the January 31 event, so we do not expect any surprises.

Our Investment Bulletin provides essential information you need to know to stay current on what’s happening in the economy to help you better understand how the financial news relates to your investments. Stay tuned as I provide my monthly updates.

Bill Norris is chief investment officer and head of asset management for CIBC Bank USA. In this role, he oversees investment management, trust and estate services to individual and institutional clients of CIBC Bank USA. Bill also serves as a member of CIBC Private Wealth Management’s Asset Allocation Committee with more than 35 years of industry experience.