Vorisek Financial Weekly Market Update for September 5, 2018

WMR Logo (002).jpg

Good morning!

When the “North American Free Trade Agreement” (NAFTA) became effective nearly 25 years ago (1/01/94), its intent was to establish regional economic cooperation between the US, Canada and Mexico.  However, in America’s “rust belt” states, NAFTA has been blamed for the loss of well-paying manufacturing jobs that migrated south to Mexico.  In the months leading up to his November 2016 election, Candidate Trump called NAFTA “the worst trade deal the US has ever signed.”  Last week President Trump announced an agreement between the US and Mexico to rework portions of NAFTA without bringing Canada into the negotiations.  If Canada wants to be part of the “new” NAFTA, the White House may force them to open parts of its agricultural business (e.g., dairy and poultry) to American farmers (source: BTN Research).              

The levying of new tariffs on goods imported from China has warranted numerous headlines since April, but the reality is that more than half of the imports purchased by American consumers are already hit with an extra cost.  65% of the goods imported into the USA in 2016 were subject to a tariff.  The average tariff on all imported goods was just 1.73% on a dollar-weighted basis.  The largest tariffs were 33% levied on imported tobacco and 16% on imported sugar (source: Federal Reserve Bank of St. Louis).

Following the NASDAQ Composite’s close of 5049 on 3/10/00, the next 2 ½ years resulted in a painful 78% fall to 1114 on 10/09/02.  The technology-oriented index didn’t close back above 5049 until 4/24/15.  The new record close for the NASDAQ Composite is 8110 that was set last week on Wednesday 8/29/18 (source: BTN Research).         

Notable Numbers for the Week:

  1. WHERE WE ARE - With 4 months to go in 2018, the S&P 500 is up +9.9% YTD (total return).  The index has gained +10.1% per year over the last 50 years, i.e., 1968-2017 (source: BTN Research). 

  2. BORROW THEIR WAY OUT OF A DEBT PROBLEM – Chicago is considering borrowing $10 billion in the bond market because of the city’s $28 billion pension funding shortfall (source: Chicago CFO Carole Brown).   

  3. WHO OFFERS WHAT - 65% of 1,825 American employers surveyed in the 4th quarter 2017 offer a defined contribution retirement plan (e.g., 401(k) plan) to their employees.  Just 13% of the employers provide an employer-funded defined benefit pension plan (source: Transamerica Retirement Survey). 

  4. CHILD CARE - The average annual cost of hiring a nanny to watch one child is $30,160, equal to $580 a week (source: Care.com Cost of Care Survey).  

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at info@vorfin.com.  You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.