SFM Observer - January 2020
Issued: February 7, 2020
The Dow closed the first month of the new year at 28,256 for a monthly loss of -282 points or -1.0%. Renewed tensions in the Middle East, the spread of the Coronavirus and some mixed economic signals led to a choppy month for the stock market. The U.S. and China signed phase I of the new trade agreement which should help American farmers but there is still a long way to go on many contentious issues. The impeachment trial was in the news on a daily basis and the democratic presidential candidates are advertising heavily pushing their platforms and adding to an atmosphere of uncertainty. The markets are trying to digest all of the pros and cons and reach appropriate valuation levels.
Some interesting events from the month just passed:
• Many drug companies used the start of a new year to raise drug prices far in excess of the rate of inflation. Sixty companies raised prices on hundreds of drugs by an average of 5.8%. With so many presidential candidates running on lowering drug prices, you would think the industry would show some restraint.
• Google has developed an artificial intelligence system that can read mammograms and help doctors reduce their workload and detect some cancers that the doctors missed. Although not ready for clinical use, the system shows promise for reducing cancer fatalities and being applied to other types of cancer.
• The Chinese automobile market has weakened and this is creating a problem for the major automobile manufacturers. A slowing economy in China coupled with the expiration of government subsidies has led to a sizable drop off in new car sales. The slide is expected to continue into 2020.
• The IRS only audited 0.45% of personal income tax returns in 2019. For reference, in 2010 the IRS audited 1.1% of all returns. The fall is blamed on budget cuts and a lack of investment in new enforcement capabilities.
• The number of women working in the U.S. exceeded the number of men working for the first time in a decade. The leading industries for job growth are healthcare, education, and hospitality.
• Home sale prices and volumes were on the rise as 2019 came to a close. With interest rates predicted to remain very low and job stability strong, the housing market is positioned to have a good year in 2020.
Thank you for reading this issue of the SFM OBSERVER. If you have any comments or questions, please send us a message.
Until next month,