November 6, 2019

The HCM Buy Line is strong and getting stronger from a technical standpoint. We are still overbought but hope to see some consolidation in the markets over the next week or so. We feel the market could be 3-6% higher by year-end, and we expect the rally to continue into 2020.

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Now, what could go wrong? The Impeachment hearings will be interesting. We are not sure, and no one is as to how this will affect the markets. Any negative language about a deal with China could halt the rally.

Impeachment moved to the next stage with the House vote last week.  We expect the House to vote to impeach President Donald Trump by year-end. All 194 Republicans voted to support Trump against impeachment. Of the 31 House Democrats who represent districts, Trump carried all but two votes for the impeachment inquiry.  Unified House Republicans demonstrate Trump’s hold on the party and the near impossibility that 20 of the 53 Senate Republicans would join Senate Democrats to remove the President from office.

A China trade deal appears near, though a slight glitch, the riots in the Chilean capital of Santiago has forced the cancelation of the APEC meeting where Trump and Xi were going to sign the Phase One agreement. The agreement is likely to have Chinese agricultural purchases and licenses for U.S. companies to sell products to China tech giant Huawei. President Trump has suggested that the signing take place in Iowa, a perfect fit for the Administration’s goal of getting Chinese business for American farmers.  While Iowa is unlikely to be the site of the signing, both sides would like to see an agreement in the coming weeks.

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The number of job openings decreased 3.8% in September to 7.024 million, the lowest level since March 2018, led by fewer vacancies in health care and social assistance, retail trade, and the federal government. There was also a notable 8.4% pickup in layoffs to 1.964 million, the highest level since May 2012. Even so, firms continued to hire, with the number of hires up 0.9% to 5.934 million. As labor market conditions remain tight, the number of unemployed per job opening held at 0.8 and has been below 1.0 since February 2018.


 

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