President Trump signed into law the Hong Kong Human Rights and Democracy Act before Thanksgiving but avoided dampening the trade talks with language emphasizing his powers concerning foreign relations. Officials in China indicated that the law itself would not derail progress, but its implementation could. Both sides seemed optimistic that a trade deal is still achievable. The next big hurdle will be to see if there is meaningful progress prior to December 15, when a new round of tariffs is set to be imposed on Chinese consumer goods sold in the U.S. As the holiday season kicked off with Black Friday shopping, consumer income and preliminary online sales data were pointing to strong retail sales to round out 2019. Over the Thanksgiving holiday, the president visited troops in Afghanistan and signaled that he was set to resume peace talks with the Taliban.
U.S. stock markets continued their upward glide with the S&P 500 nearing a 30% year-to-date gain. Small-cap stocks ended the short week with an impressive 2.2% rise but still have a big gap to close to reach the gains of their large-cap counterparts. Bonds ended the week with relatively flat returns as yields settled into a stable trading range after their tumultuous moves this fall. Oil prices fell sharply as the likelihood of extended coordinated production cuts from OPEC dwindled. This comes as Saudi Aramco launches an IPO which will formally go public December 4. The years-long energy glut and shale boom have taken their toll on the energy sector. Once approximately 25% of the index (in 1980), it now humbly sits at a little over 4%.
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