Weekly Market Commentary 02/03/20 The Markets Prepare yourself. There is a good chance markets will be volatile in the coming weeks. Precautions designed to slow the spread of the coronavirus may also slow Chinese economic growth and, by extension, global economic growth.1 On Thursday, the World Health Organization declared the coronavirus to be an international health emergency. The U.S. State Department issued a travel advisory for China, and major U.S. airlines suspended flights to the nation, reported Forbes. 1, 2 In six Chinese provinces, factories and businesses are shuttered until at least February 10. The closures have created issues for global supply chains, and Financial Times reported, “Companies from luxury retailers to airlines and banks are reeling as the disease accelerates.” 1, 3, 4 Events sparked a bond rally as investors shifted assets into safe haven investments. The Economist wrote that previous viruses have not had lasting effects on economic growth. “Other recent epidemics have reinforced the impression that economists should not be overly worried, so long as good doctors are on the job. Neither avian flu in 2006 nor swine flu in 2009 dimmed the global outlook. Yet even flint-hearted investors are wondering whether the new epidemic might be worse. Stocks in Hong Kong have fallen by nearly 10 percent as reported infections have steadily increased. Tremors have also rippled through global markets.”5 China’s government is prepared to step into the breach. On Saturday, Reuters reported, “Chinese authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support firms affected by the virus epidemic…” The Chinese central bank is expected to begin offering support on February 3 before the Chinese stock market reopens for the first time since January 23.6 The European Union may also be in need of economic stimulus. Financial Times reported the Eurozone economy came to a virtual standstill (up 0.1 percent) in the fourth quarter and grew just 1.2 percent during 2019. Economies in France and Italy, the second and third largest in the region, both contracted during the fourth quarter.7 Major U.S. stock indices moved lower last week.1S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable. THE THINGS WE DO FOR PETS. While there is some debate about how many American households include pets – The Washington Post reports estimates from the American Pet Products Association are about 11 percent higher than those of the American Veterinary Medical Association – there is little debate about how much people love their pets.8 With Valentine’s Day coming up soon, you may be wondering how to show your pet you care. Here are a few ideas: Doggie playlists and podcasts. Want to make certain your pup doesn’t get lonely (or into too much trouble) when left at home alone? One major media company is making canine playlists and podcasts. Reuters reported the podcasts feature, “…soothing music, ‘dog-directed praise,’ stories, and messages of affirmation and reassurance narrated by actors to alleviate stress…”9Video chat or…bark? Wouldn’t it be great to take a break and chat with your pet during lunch hour? One social media user, cited by The Insider, thought so. “I taught my dog to accept [video] calls through my laptop at home while I'm at work. Then, we just talk.”10Travel somewhere fun. Millions of people travel with their pets, according to Forbes. One travel magazine publishes a pet-friendly article each month. The LA Travel Magazine archive includes titles like, ‘TopDawg’ Resorts in the U.S. and The Pawfect Guide to Dog Beaches in SoCal.11, 12Just don’t supersize it. A pet owner, cited by the Odyssey, occasionally indulges her pets with people food. “When we go out for [fast food] or something, my mom and I buy them each their own burger and sometimes include fries so they can have a meal.”13 On Valentine’s Day, remember to do something nice for the people you love, too. Weekly Focus – Think About It “The more cats you have, the longer you live. If you have a hundred cats, you’ll live ten times longer than if you have ten. Someday this will be discovered, and people will have a thousand cats and live forever.”--Charles Bukowski, Poet and novelist14 Best regards,Michael Fleury, CFP®Financial Advisor ______________________ Sources:1 https://www.forbes.com/sites/sergeiklebnikov/2020/01/31/markets-plummet-dow-drops-over-600-points-as-coronavirus-infections-outpace-sars/#5e9264725ddc2 https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories/china-travel-advisory.html3 https://www.ft.com/content/b8027b84-4514-11ea-aeb3-955839e06441 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-Apple_Shuts_42_China_Retail_Stores_Due_to_Coronavirus-Footnote_3.pdf)4 https://www.ft.com/content/f3fcdc5a-4119-11ea-bdb5-169ba7be433d (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-The_Impact_of_Coronavirus_Across_Industry_and_Finance-Footnote_4.pdf)5 https://www.economist.com/international/2020/01/30/chinas-coronavirus-semi-quarantine-will-hurt-the-global-economy (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_TheEconomist-Chinas_Coronavirus_Semi-Quarantine_will_Hurt_the_Global_Economy-Footnote_5.pdf)6 https://www.reuters.com/article/us-china-health-cenbank/china-central-bank-to-inject-174-billion-via-reverse-repos-on-february-3-idUSKBN1ZW0747 https://www.ft.com/content/f3088ca8-43f9-11ea-abea-0c7a29cd66fe (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/02-03-20_FinancialTimes-Eurozone_Grows_Just_0.1_Percent_as_France_and_Italy_Shrink-Footnote_7.pdf)8 https://www.washingtonpost.com/science/2019/01/31/how-many-americans-have-pets-an-investigation-into-fuzzy-statistics/9 https://www.reuters.com/article/us-odd-spotify-dogs/spotify-launches-playlists-for-dogs-left-home-alone-idUSKBN1ZE1D810 https://www.insider.com/ways-people-spoil-their-pets-2018-10#they-taught-their-dog-how-to-facetime-111 https://www.forbes.com/sites/michaelgoldstein/2019/02/22/americans-spending-billions-on-pet-travel-and-boarding/#40c74baa24f712 https://latravelmagazine.com/activities/pet-friendly/13 https://www.theodysseyonline.com/14-strangest-things-people-do-with-their-pets14 https://www.goodreads.com/work/quotes/44216022-on-cats * Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. 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