The major markets experienced losses last week as US-China tensions and coronavirus concerns were renewed. The tech centric Nasdaq fell about the same as the MSCI Emerging Market index. Meanwhile, the Dow, S&P 500 and MSCI World Indices all fell down in the mid 2% range.

The losses were fairly consistent at the sector level with only Healthcare ending in positive territory for the week. Energy suffered the greatest losses but was followed closely by real estate.  The losses in the Energy sector were despite gains made in the GSCI Crude Oil Index totaling 8.63% for the week. It was the GSCI Natural Gas Index that was hit with a loss of 11.9% for the week.

Real Estate and Financials both suffered last week as the Mortgage Bankers Association reported  another increase in the weekly mortgage forbearance rate to 7.91% An increase was expected as a new month began and more borrowers requested forbearance on their home loans. Mike Fratantoni, MBA's Chief Economist and Senior Vice President of Research and Industry Technology, said that “FHA and VA borrowers have been most impacted by the job losses thus far, with the share of Ginnie Mae loans in forbearance at almost 11 percent.”

The economic instability has cause some to wonder if we might see negative rate in the Fed Funds Rate by next year. Midweek, Fed Chair Jerome Powell squelched the idea of negative interest rate in the U.S. stating, “The committee’s view on negative rates really has not changed. This is not something that we’re looking at.”

Finally, on Friday the U.S. Department of Commerce announced plans to restrict Huawei from using American made technology and software in its manufacturing of semiconductors. The rule change is set to go in effect in September. “Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort.  However, that effort is still dependent on U.S. technologies,” said Secretary of Commerce Wilbur Ross.

This news echoes last years trade war headlines as the US, along with much of the world, looks to China for explanation for the handling of information and mitigation for the early days of the coronavirus pandemic.

“Share of Mortgage Loans in Forbearance Increases to 7.91%: Mortgage Bankers Association.” MBA, www.mba.org/2020-press-releases/may/share-of-mortgage-loans-in-forbearance-increases-to-791.

JeffCoxCNBCcom. “Powell Says the Federal Reserve Is Not Considering Negative Interest Rates.” CNBC, CNBC, 13 May 2020, www.cnbc.com/2020/05/13/powell-says-the-federal-reserve-is-not-looking-at-negative-interest-rates.html.

“Commerce Addresses Huawei's Efforts to Undermine Entity List, Restricts Products Designed and Produced with U.S. Technologies.” U.S. Department of Commerce, 15 May 2020, www.commerce.gov/news/press-releases/2020/05/commerce-addresses-huaweis-efforts-undermine-entity-list-restricts.


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The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries.

https://us.spindices.com/indices/equity/sp-500

The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.

https://us.spindices.com/indices/equity/dow-jones-industrial-average

The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes over 2,500 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes

https://indexes.nasdaqomx.com/Index/Overview/COMP

The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets.

The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017 it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country.

https://www.msci.com/

The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

https://us.spindices.com/indices

Companies in the S&P 500 Sector Indices are classified based on the Global Industry Classification Standard (GICS®).

https://us.spindices.com/indices

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