Trade truce, banks declared healthy, skilled workers needed
We hope you are enjoying your 4th of July weekend! To add to the celebration, this week we saw several positive developments such as a trade truce, developments in job training and, for the second time in 10 years, all major banks passing the Federal Reserve’s stress tests. Read on to get the details.
Trade Truce, For Now – At the G20 Summit in Japan last weekend, President Trump and Chinese President Xi Jinping calmed the markets by announcing a ‘trade truce,’ whereby the two sides would return to trade negotiations and the U.S. agreed to ease restrictions on Chinese companies wishing to purchase high-end technology equipment from U.S. companies. On the Chinese side, they agreed to increase purchases of U.S. agricultural goods in an effort – albeit a modest one – to cut the trade deficit. But perhaps the best news to come from the summit was the U.S. agreeing to suspend, indefinitely, the new tariff increase to 25% on billions of Chinese goods.1
Job Training Crucial in the Modern Economy – As the U.S. economy continues to expand and add new jobs, there is growing awareness of a major issue in the labor market: The number of job openings in the U.S. now outnumbers the number of unemployed Americans – by a staggering 1.625 million. The reason: Many of these new jobs involve specialized skills or specialized training, which low skilled Americans simply do not have. To address this problem, new training is required and programs are needed to push Americans further up the skilled labor pool. Apprenticeships are one approach to solving the problem – classroom education combined with on-the-job training for skilled positions. For some time, the federal government ran apprenticeship programs through the Labor Department, but the Trump Administration is pushing a proposal to allow business groups, colleges, and other entities to take the reins. The success of these types of apprenticeships and job training could be crucial to long-term growth trajectories and labor force participation in the United States.2
It can be challenging as an investor to stay on top of all the important news stories and economic indicators that shape the market.
You don’t need to become an expert. However, having a grasp of key economic and financial statistics—from the inflation rate to the new corporate tax rate—can provide insight into how key variables might influence your returns, and could potentially help you reach your financial goals with more confidence.
If you have $500,000 or more to invest, get our free guide, 6 Essential Concepts to Help You Pursue Investing Success.3 It’s a valuable resource that walks you through influential data, from the unemployment rate to corporate earnings, and our views on how these factors could affect your investments.
All Major Banks Pass Stress Tests – For only the second time in 10 years, all 18 major U.S. banks passed the second round of the Federal Reserve’s stress tests, the annual exercise used to determine if banks are sufficiently capitalized to withstand a major U.S. downturn. The standards for passing the tests are fairly stringent – banks are tested to see if they could withstand a 50% decline in stock prices plus 10% U.S. unemployment after they’ve increased share buybacks and dividends. The positive results are a sign that U.S. banks are now in their strongest financial position since prior to the Great Recession, and it also clears banks to return profits to shareholders through increased dividends or more share buybacks.4
In addition to keeping up with relevant news stories, it is important to understand key economic indicators and financial statistics that could influence your investments.
From the inflation rate to the new corporate tax rate, insight on these factors can help you better understand how these variables might influence your returns, and could potentially help you reach your financial goals with more confidence.
If you have $500,000 or more to invest, get our free guide, 6 Essential Concepts to Help You Pursue Investing Success.5 It’s a valuable resource that walks you through influential data, from the unemployment rate to corporate earnings, and our views on how these factors could affect your investments.
1 The Wall Street Journal, June 29, 2019. https://www.wsj.com/articles/trump-says-he-is-set-to-discuss-huawei-with-xi-11561769726?mod=djem10point
2 The Wall Street Journal, June 24, 2019. https://www.wsj.com/articles/trump-administration-proposes-new-type-of-apprenticeship-11561384506
3 ZIM may amend or rescind the guide “6 Essential Concepts to Help You Pursue Investing Success” for any reason and at ZIM’s discretion.
4 The Wall Street Journal, June 27, 2019. https://www.wsj.com/articles/federal-reserve-approves-big-banks-to-boost-payouts-to-investors-11561667401?mod=djem10point
5 ZIM may amend or rescind the guide “6 Essential Concepts to Help You Pursue Investing Success” for any reason and at ZIM’s discretion.
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