Market Report and Perspective
December 2019

Investors saw November post the best month for the Dow Jones Industrial Average since last June, which was the best June for the Dow since 1938. And by the end of November, all three major domestic stock indices had gains of 20% of more for 2019. For the month, the Dow, Standard & Poors 500 and NASDAQ posted gains of 3.63%, 4.11% and 4.64%, respectively.

The backdrop for the market’s performance was centered on optimism over the potential for a trade deal with China and solid economic reports. The Trump administration continues to move toward a trade accord with China, but with no final deal looking to be signed well into 2020. As for economic growth, the second estimate of third quarter gross domestic product (GDP) was released in November, showing that the U.S. economy grew at an annualized rate of 2.1%, topping the initial estimate of 1.9%. This GDP estimate beat the 2% rate of the second quarter, and personal consumption remains a component of that growth.

Third quarter corporate earnings, with 95% of companies reporting, posted a decline of 1.3% year-over-year – solidly ahead on of expected decline of 3.6% - with 9 of the 11 S&P 500 sectors beating their earnings estimates.

The monthly jobs report, while solidly exceeding expectations (128,000 new jobs created with 85,000 expected), indicated a slowing growth rate compared to that of 2018. Some market watchers, however, saw this jobs report as positive given the negative impact of the General Motors strike. This slowdown in job growth, however, was one of the primary factors cited for the Federal Open Market Committee (FOMC) to cut interest rates by 0.25% (25 basis points). This was the third consecutive FOMC meeting that the Fed acted to cut interested rates to help in an effort to sustain growth in the U.S. economy.

Developed foreign stocks, although gaining 1.13% for November measured by the MSCI EAFE Index, remain well behind the pace of (most) U.S. stocks for 2019. Some market analysts, however, have made a case for improved performance of the developed foreign markets in 2020. We will see. The foreign emerging markets, measured by the MSCI Emerging Markets Index, were roughly flat last month, declining 0.13%. Fluctuations in the value of the U.S. have impacted, and continue to impact, the performance of the foreign emerging markets.

Although the Fed cut interest rates in November, market interest rates rose during the month making for a challenging environment for bonds. The yield on the 10-year Treasury, which ended October at 1.69%, finished November at 1.78% after hitting 1.94% during the month. This rise in interest rates caused the Bloomberg Barclays U.S. Aggregate Bond Index to decline by 0.05%. High yield bonds, which tend to be more highly correlated to U.S. stocks, gained 0.33% for the month.


It seems that the prospect of a recession is still heavy on the minds of many investors. With the market devastation of 2008 and early 2009 still fresh in memory, the prospect of a repeated market decline has some investors looking to “take cover” now. Taking cover may be as simple as reducing the allocation to stocks in favor of bonds, or as dramatic as shifting all investments to cash or CDs.

Behavioral economics defines “taking cover” in one’s investment portfolio as an emotional effort to take control of something over which they cannot control. A recession is coming, eventually, but no one knows when. The same applies to a market decline or correction. It’s the timing we don’t know.

The challenge facing the investor is the cost of taking cover while waiting for the recession/market decline (i.e., the opportunity cost). It is widely believed that investors lose more money protecting themselves from a recession than from the recession itself.

That has certainly been the case in 2019. Whether concerned about an aging stock (bull) market or an inverted yield, investors who took cover paid a high price for being wrong… or at least very early.

2020 is right around the corner and with it comes many of the same concerns of 2019. We invite our clients to share with us any concerns (economic, market, political, etc.) and together we will determine the best course of action.

Notes From Your HFG Team
This past Saturday HFG had our annual Christmas Dinner at 7D Steakhouse in Carmel followed by a wonderful night's stay at the Hyatt in Monterey. This is a great opportunity for the team to get together with our significant others and take a break from the hustle and bustle of the end of the year. It is also a great time to reflect on our year and plan how we can better serve our valued clients in the new year. Hastie Financial Group would like to wish everyone Happy Holidays! We hope your new year will be filled with happiness and success!
Health and Wellness
 Melissa Martin, Certified Pilates Instructor
Is it just me, or does it seem like we have officially entered cold and flu season? It always happens where one or two people you know start feeling under the weather, and then all of a sudden half of your work or children’s school is calling out sick. 
A Deeper Perspective
 Commonwealth Financial Network
November was another positive month for markets, with the three major U.S. indices setting all-time highs. The S&P 500 gained 3.63 percent, and the Dow Jones Industrial Average rose by 4.11 percent. The Nasdaq Composite led the way with a 4.64 percent gain.
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The financial professionals of Hastie Financial Group are Registered Representatives and Investment Adviser Representatives with/ and offer securities and advisory services through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Financial planning services offered through Hastie Financial Group are separate and unrelated to Commonwealth.