Week in Review 11.22.2019

Equity markets ended the week lower as optimism for a quick trade deal waned. As we have cautioned previously, given the recent history of trade negotiations between the U.S. and China, we would resist the temptation to assume that any trade deal is a “done deal” until it is actually signed. Unfortunately, the current round of talks is feeling very similar to those held in late April and early May, when expectations were running high that the signing of a trade deal was imminent only to see the talks eventually collapse.The “risk off” sentiment resulting from concerns about the trade deal led investors to seek the relative safety of bonds. In turn, interest rates, as measured by the 10-Year Treasury yield, slipped -0.06% to 1.77%.

While the ongoing impeachment proceedings dominated headlines throughout the week, markets had little reaction. The reason? Markets do not expect the current proceedings to result in President Trump’s removal from office. Despite the high likelihood that the House of Representatives will vote to impeach Trump, the Senate is equally likely to acquit him.

Through Friday, 96% of S&P 500 companies had reported third quarter earnings, effectively bringing earnings season to an end. According to research provider Factset, thus far 75% of companies have beaten their earnings estimates, while 59% have beaten their revenue estimates. Projected year-over-year earnings growth is expected to be -2.2%. Current projections for fourth quarter earnings growth are estimating a -1.4% decline from 4Q18.