Well, here we are again. The end of another year. It’s a time of relief, and perhaps some regret and introspection. For investors, it was a year of riding the waves that often had nothing to do with fundamentals, and everything to do with hype and negative guessing. The biggest lesson was to hang tough and to not overreact. The year ahead is very promising, as we come in with amazing economic momentum. My outlook:
- 3.0% Gross Domestic Product (GDP)
- 4.0% Wage Growth
- 15.0% S&P 500
The Message of Market
The Market stumbled yesterday, as some investors took profits and would-be buyers sat the dance out. I think it was just one of those sessions of more sellers than buyers, but not an indictment of the market.
Trade Deficit Swings Our Way
The U.S. trade deficit in goods declined sharply in November to $63.19 billion. The 5.4% drop was far better than expected and the lowest in 27 months.
Exports: +0.7%
- Auto: +2.4%
- Consumer Goods: +2.6%
- Capital Goods: +1.3%
- Food & Feed: +2.0%
Imports: -1.3%
- Consumer Goods: -2.2%
- Capital Goods: -2.0%
- Industrial Supplies: -1.5%
- Other Goods: -6.8%
U.S. Trade Deficit (Goods Only)
While some economic purists prefer, we have lopsided trade deficits with the world, the notion is that American consumers are getting stuff at cheaper prices. When it’s skewed too much, it means we need to stop making said items completely. However, I think the news is great.
Moreover, our reliance on Chinese imports has declined dramatically, propelling Mexico and Canada into the top trading spots. This doesn’t mean we don’t want access to China’s market. It only means we need to broaden our demand-and-supply chains and bring jobs back home.
US Top Goods Trading Partners | China | Canada | Mexico |
2016 | 473 | 454 | 438 |
2017 | 517 | 483 | 463 |
2018 | 550 | 521 | 512 |
2019 | 470 | 514 | 518 |
Billion USD | |||
Portfolio Approach
We add a new position to Real Estate yesterday.