The Bull Market Limps into the New Year
The market kicked off the year with small rises while negotiations around government shutdown continue to drag along with no clear end in sight and Apple made a surprising announcement. How could these events impact the market? Read on to get the details.
The Bull Sputters into the New Year – The S&P 500 limped into the new year, with a modest +0.13% rise on the first day of trading on January 2nd. Based on volatile equity market action in Asia on the previous day, however, the S&P 500’s small rise may be viewed as a minor victory. Fears about a slowdown in China continue to weigh on global markets and the pile-on of a government shutdown and a flattening yield curve in the U.S. have investors on edge. A staggering $75.5 billion was pulled from U.S. equity mutual funds and ETFs in December, which marks the largest monthly exodus since at least 1992.1
Few Signs of Breakthrough in Government Shutdown Talks – Leaders from both parties met in the White House this week as negotiations for funding the U.S. government drag along. President Trump has doubled down on his demand for border wall funding to the tune of $5 billion, but House Democrats – who take control of the House on January 3rd – have indicated that no funding for the wall will be a part of the final budget deal. House Democrats plan to submit multiple spending packages in the coming days, but Republican leaders in the Senate have indicated they will not even take a vote on a bill that does not have White House support. The end result: a government shutdown that does not have a clear end in sight.2
While you cannot predict exactly how these stories will pan out or how they could affect the market, you can try to prepare for what’s to come in 2019. As you kick off the New Year, knowing your net worth is a great place to start planning. It is critical to your financial well-being and can help you prepare for what’s ahead.
If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide Measuring Your Net Worth.3 Simply click on the link below to get your copy today!3
The Elephant on the Trading Floor — The week of January 7th could be a meaningful one in defining future trade relations between the United States and China. The U.S. trade delegation led by China hawk Robert Lighthizer is set to arrive in Beijing for the week of January 7th to press for a resolution to the trade dispute. China has so far offered some concessions in the form of pledges to cut tariffs, ease restrictions on foreign companies operating in China, and buy more U.S. goods such as soybeans, but Lighthizer is largely skeptical of Chinese promises on trade given their historical tendencies to over-promise and under-deliver. So far, China has made these promises but offered scant detail about actual implementation, which the U.S. trade delegation is expected to push for next week. President Trump tweeted that “big progress” was being made already, but many market observers viewed this as an attempt to calm markets.4
Apple, Inc.’s Surprising Announcement – in a rare move for Apple, CEO Tim Cook sent a letter to investors revising downward the company’s quarterly earnings and revenue forecast for the upcoming quarter, changing numbers that were released to the public only days before on December 29th. The downward revision marks the first time in 15 years that the company has had to cut forecasts, and was prompted by a recalibrated impact of waning sales in China. The revision brought fresh concerns about the extent of China’s economic slowdown, but also raised fresh questions about Apple’s future in the world’s largest smartphone market. China represents nearly 20% of Apple’s total revenue, and Cook indicated that 100% of the estimated shortfall in quarterly revenue comes from the China impact. Even with the downward revision, however, it should be noted that Apple’s fundamentals are the envy of just about every company in the world:5
- Revenue of approximately $84 billion
- Gross margin of approximately 38 percent
- Operating expenses of approximately $8.7 billion
- Other income/(expense) of approximately $550 million
- Tax rate of approximately 16.5 percent before discrete items
While we may not know how all these stories will pan out in 2019, or how they could affect the market in the long-term, knowing your net worth can be critical to your financial well-being and can help you prepare for the New Year.
Calculating your net worth may give you a better idea of where you stand in terms of your long-term investment goals. If you do not currently know your net worth, then now may be a great time to calculate it.
If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide Measuring Your Net Worth.6 Simply click on the link below to get your copy today!
2 The Wall Street Journal, January 2, 2019. https://www.wsj.com/articles/shutdown-shapes-up-as-day-one-test-for-new-congress-11546425000?mod=hp_lead_pos3
3 ZIM may amend or rescind the “Measuring Your Net Worth” guide for any reason and at ZIM’s discretion.
4 The Wall Street Journal, December 31, 2018. https://www.wsj.com/articles/u-s-presses-china-on-trade-proposals-11546208150?mod=djem10point
5 Newsroom, January 2, 2019. https://www.apple.com/newsroom/2019/01/letter-from-tim-cook-to-apple-investors/?mod=article_inline
6 ZIM may amend or rescind the “Measuring Your Net Worth” guide for any reason and at ZIM’s discretion.
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