#443 Bring it Home


Valentine’s Day Spending

It is the last significant week of earnings season and so far, earnings are up 2.3% since last quarter. Reports show that 70% of companies are beating expectations which is a solid number. We’ve been talking about it for 3 weeks now. If earning season can be strong, that’s going to drown out the noise of the coronavirus fears. We’re seeing that the market is overall positive, even with that news, so it proves to be still going in the right direction. On Friday of this week, retail sales reports are coming out and it’s also Valentine’s day. We have a couple of fun facts for you to start the week. Valentine’s day is the 5th largest holiday, spending wise. The average consumer will spend roughly $196 on their valentine. That is an increase of 21% from last year, which is a pretty big jump. We care about that because it shows that three is still a strong consumer.

More Jobs

Average hourly earnings are up 3.1% since last year. In terms of jobs, from a domestic standpoint, 225,000 jobs were added in the month of January. That’s way more than the expected 165,000 they initially assumed. Adults between the ages of 25 and 64 have the highest participation rate in adults employed since 2008 when we had the great recession. We’re seeing jobs go up, earnings go up and unemployment staying steady. All of this ties back to the market. Money coming in, the market’s going up and that’s what we want to see because it shows positivity. Three-fourths of the jobs created were created by small and midsize firms. That shows strength from the bottom. That’s something important to remember with the coronavirus fears and any international fears that are out there. That statistic shows that small local businesses aren’t as impacted by the current news. Hopefully, these jobs are not going to be a one-off and it can be sustainable. Looking at the jobs number based on a January 12th survey, which was before the coronavirus fears, it kind of shows that at the end of last year, after we even signed the trade deals, we saw a lot of strength coming out of that.

Caucus Failure

Another topic we talked about last week was the Iowa caucus. We didn’t really get a result out of that which pushes a lot of focus on New Hampshire, which will be Tuesday. New Hampshire will be the first in the nation primary where there’ll be true voting as opposed to caucusing. It should be a lot smoother and puts a lot of emphasis on the winner of New Hampshire. Looking at the analytics, it shows that candidate Bernie Sanders looks to be in the lead. Just like saw with Iowa, who knows what will honestly happen. The market will be watching that and so will we. Hopefully, the market won’t be too focused. We’re looking forward to 2020 as the election takes the reins possibly from earnings.

Client Questions

We had some excellent client questions this week about trade deals and how much it could help the GDP. If you look at it for the year 2020 with the politics going on it would be a 1.2% GDP growth. That’s more of the political version and potentially too high. If you look at where a lot of the nonpartisan economic research is, it shows more in the 0.35-0.5 range, which is still a nice pickup. Even that level of percentage in the United States still has a huge amount of multiplier effect. How much of that number is truly going to pick up? Around 0.35%, maybe a little north of that is potentially the answer to that. A little bit added to GDP in 2020 will mostly be in the auto sector because the USMCA made the supply chain much smoother. Just the pickup in the auto sector should give us a nice GDP pop for the year, which is overall good. There’s a lot of noise regarding global fears and the coronavirus, but we are seeing things to continue to look great here at home in the U.S.

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