 Economic Highlights
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The Fed interest rates are steady
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The elusive China trade deal is getting ever closer to the breakthrough
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Q3 corporate earnings were largely good, with about 80% S&P 500 companies beating the previously reduced earnings expectations, essentially ending conversations about “earnings recession”
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The November US purchasing managers’ index (PMI) pointed to a pickup in activity across both manufacturing and services
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The latest estimate of Q3 US GDP rose, so the pace of growth actually picked up slightly, despite expectations for a continued slowdown
 Market Highlights
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US Equities bull market keeps going, with S&P 500 Index closing up 3.6%, ahead of all other major asset classes
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Foreign Developed Markets Equities were also up 1.1%, with Europe taking the lead
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Domestic bonds were little changed, but foreign developed bonds retreated a bit
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Commodities also gained -2.6%, with oil up 2.3%, and gold down -3.3%, in a risk-on month
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US REITs took a rare breather, down -1.5%
 Observations and Expectations
By the time of Thanksgiving, US Markets delivered plenty for investors to be thankful for. As corporate earnings, unemployment, inflation, and economy growth continue to defy the chorus of lower expectations, those who stayed the course with what’s been working all year – growth equities – got rewarded again in November.
Among the earnings reports, energy and materials sectors continued their meaningful downward trend, which keeps us away from these areas for the most part. The rest of the economy seems healthy, with technology recovering after a correction in several high-flying industries. The recent lead by the financials, despite lower interest rate, is a very positive sign for the overall market, as well as good performance by industrials, trade issues notwithstanding.
Looking forward to the rest of the year, with no surprises from the Fed or UK vote, and with China incremental deal inching closer, you can just feel the Santa Claus rally in the air. 2020 may be a totally different animal, though, with one keyword to keep in mind: Election. The retail sales results for the 2019 Holiday Season will be the first test.
 Sector Update
Materials sector is typically the definition of cyclical. As economies expand, the manufacturers require more raw materials, driving up the prices and improving earnings of those companies that provide them. The story has been different this time, though. (How many times have you heard THAT from market commentators?) You can blame uncertainty due to the trade issues or the tariffs directly. Or you can point to the (relatively) strong dollar. In any case, the entire sector continues to bleed red.
Healthcare, on the other hand, have been doing the best sector in November. The group is one of the most diverse among all 11 sectors, with some parts are very demand inelastic (think hospitals) and some are super growth (think biotech). The latter reeled earlier in the Fall, as the rise of Sen. Warren in the polls scared biotech investors. With the drug pricing bill likely dead on arrival in the Senate, and boosted by recent M&A activity, the sector seems to be back in the growth mode, but remains volatile as always.
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