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Weekly Market Recap: Feb. 3, 2020

The week in review

  • New home sales +694k
  • Consumer confidence 131.6
  • Pending home sales -4.9% m/m
  • Core/headline PCE both 1.6% y/y
  • Consumer sentiment 99.8

The week ahead

  • IHS Markit mfg/non-mfg PMIs
  • ISM mfg/non-mfg PMIs
  • Light vehicle sales
  • ADP employment report
  • International trade
  • Employment report

Thought of the week

4Q19 real GDP growth met expectations at 2.1% q/q saar, matching last quarter’s growth rate. For 2019 as a whole, the economy grew at 2.3% vs. 2.9% in 2018. Consumption growth slowed to 1.8% from 3.2% last quarter and 4.6% in 2Q, reflecting the fading effects of the tax cuts. Home building, which fell over the last six quarters, rebounded following the Fed’s three rate cuts, contributing 0.2% points to growth. However, those rate cuts failed to stimulate business fixed investment, which has contracted for three consecutive quarters, likely in reaction to heightened trade uncertainty.

Inventory growth fell to $11.9 billion from $67 billion as the inventory correction continues. Perversely, a sharp -8.7% decline in imports was the strongest contributor to growth, and exports fell as well, reflecting global trade weakness. Finally, government spending provided a boost, but is likely to soften ahead. Going forward, imports will likely rebound, and with consumer spending moderating, economic growth overall is likely to edge down rather than edge up in 2020.

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Past performance does not guarantee future results.

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Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The price of equity securities may rise or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. International investing involves a greater degree of risk and increased volatility. There is no guarantee that companies that can issue dividends will declare, continue to pay, or increase dividends. Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage.

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J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. and JPMorgan Asset Management (Canada) Inc.

©JPMorgan Chase & Co., February 2020

Unless otherwise stated, all data is as of February 3, 2020 or as of most recently available.

Disclosure: J.P. Morgan

Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The price of equity securities may rise or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. International investing involves a greater degree of risk and increased volatility. There is no guarantee that companies that can issue dividends will declare, continue to pay, or increase dividends. Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage.

JPMorgan Distribution Services, Inc., member of FINRA.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. and JPMorgan Asset Management (Canada) Inc.

 

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