The major indexes were mostly flat for the week after recovering from a pullback earlier in the week. Perhaps the biggest development was the fact that the market, for once, was not driven by expectations about the outcome of a trade deal with China. In fact, the prospects of the trade deal looked particularly grim as the December 15 tariff deadline approached without a deal in sight. But still the market rose later in the week, driven instead by a collection of strong economic data, including very good jobs numbers. Non-farm payrolls rose 266,000 over the previous month, above the expected increase of 180,000. The Unemployment rate fell to 3.5%, down from 3.6% and the lowest it has been in 50 years. A big question mark going into 2020 is whether the Federal Reserve will continue its accommodative stance that has buoyed the market this year with three rate cuts and purchases of $60 billion a month of Treasury bills since January.

Jobs Market Firing On All Cylinders

In addition to a lower unemployment rate and higher nonfarm payrolls, jobless claims were 203,000, down from 213,000 and lower than the 218,000 expected. The end of the General Motors autoworker strike helped boost jobs, but even adjusted for this the picture looked positive.

The Fed’s Stealth Stimulus

Though the Fed has insisted that its bond buying program, initiated shortly after the market sell-off at the end of last year, is not a continuation of quantitative easing, it has added liquidity to the market and likely provided a boost to risk assets including stocks. Whether the Fed resumes increases in the target interest rates and continues this program will be key factors for the market in 2020.

Changes in Fed Balance Sheet

What We’re Reading

  • How to Spend Money: Psychological Tricks for Worry-Free Spending. What you need is a way of thinking about how to spend money so that you can make financial decisions without worry.  These tips will allow you to spend your money guilt-free. … (Article)
  • This Will Be the First Decade in Modern History Without a Recession. There has been a recession every decade, except the current one, going back to the 1850’s… (Article)

Market Snapshot

For Week Ending 12/6/2019 (Cumulative Returns)1

Did You Know?

For 36 years PNC Bank has calculated the prices of the gift in the classic carol “Twelve Days of Christmas”. The result is the PNC Christmas Price Index. This year a modest increase of 0.2% makes the twelve gifts a feather’s weight higher than 2018, but a 95% increase from the first Christmas Price Index in 1984. … (Article)

Presented by the Investment Committee of Lake Street, an SEC Registered Investment Adviser.

1.Source – Morningstar, Inc. Global Stocks is represented by MSCI ACWI Index, Developed Markets is represented by MSCI EAFE Index, and Emerging Markets is represented by MSCI EM Index. Corporate Bonds is presented as the Bloomberg-Barclays U.S. Aggregate Bond Market Index. Municipal Bonds is presented as the Bloomberg-Barclays Municipal Bond Market. High Yield Bonds is presented as the Bank of America-Merrill Lynch U.S. High Yield Index. 10 Year Treasury refers to the valuation of a 10 Year Treasury Note, a debt obligation issued by the U.S. Department of the Treasury. Fed Funds Target represents upper limit of the federal funds target range established by the Federal Open Market Committee. Inflation Rate provided for the purposes of this report by the U.S. Bureau of Labor Statistics. Unemployment Rate calculated by the U.S. Bureau of Labor Statistics. WTI Crude Oil refers to the price of a barrel of West Texas Intermediate (NYMEX) Crude Oil. Gold – Spot Price relates to the valuation of an ounce of gold, as traded on the NYSE Arca Exchange. U.S. Dollar refers to the U.S. Dollar Index (DXY). All Returns are denominated in USD (United States Dollar), unless otherwise explicitly noted.

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.