Don't Call it a Comeback

U.S. markets rebound from Tuesday's losses as trade sentiment improves.

The Market Sum | Insight after the bell By Caleb Silver, Editor in Chief Wednesday's Headlines 1. U.S. markets rebound on improved trade sentiment 2. Oil prices rise ahead of OPEC meeting  3. U.S. private payrolls add significantly fewer jobs than expected 4. ESG Investing is ready for prime time 5. What scares institutional investors Markets Closed Dow 27,649.78 0.53% S&P 3,112.76 +0.63% Nasdaq 8,566.67 0.54% VIX 14.8 -7.27% Bitcoin $7,228.71 -1.45% US 10-Yr Yield 1.781 +4.21%     credit: Getty Images   Markets Today It's not too often that I get to quote LL Cool J, one of my favorite entertainers, but his 1990 hit, Mama Said Knock You Out  was ringing in my ears all day. U.S. markets did bounce back from yesterday's selloff, although they closed below their intraday highs. The catalyst may have been a Bloomberg News report this morning indicating that U.S. and Chinese trade officials were indeed still talking and making progress on an agreement. We've been in this yo-yo news cycle for over a year now, and nothing has fundamentally changed since the two economic powerhouses imposed tariffs on one another's goods. Today's sentiment was positive, yesterday's was negative, and tomorrow's is anyone's guess. The overall trend for markets has been upwards, which is what long term investors like to see.    Headlines Oil prices gained about 4% today ahead of the OPEC meetings, set to begin tomorrow in Vienna. Members of the cartel, led by Saudi Arabia, are expected to announce more production cuts to help lift prices. In the U.S., inventories decreased by 4.9 million barrels for the week ending Nov. 29, according to the Energy Information Agency. U.S. private payrolls increased by just 67,000 in November according to an estimate Wednesday from ADP and Moody's Analytics. That was well below the consensus estimate of 150,000 and the lowest monthly growth since May. The big miss calls into question the high estimates for Friday's nonfarm payrolls report from the Labor Department, with the current forecast of 187,000 jobs added last month.  Shares of PG&E Corp. (PCG) climbed 21% Wednesday after Bloomberg reported the California-based utility was near a deal to pay out $13.5 billion to wildfire victims. The Bloomberg report said half of the payout would be in cash, upfront in a lump sum, and the other half would be in stock, to be paid over 18 months. A settlement would help resolve the utility's bankruptcy.  Johnson & Johnson says it has reaffirmed that its Johnson's Baby Powder is safe and free of asbestos. Last month the company voluntarily recalled a single lot of the product after a Food and Drug Administration (FDA) test found low levels of chrysotile asbestos contamination.         ESG Investing is Ready for Prime Time I spent part of yesterday with Bank of America's research team, listening to their investing themes for the next decade. One big theme that kept coming up was the emergence of ESG (Environmental, Social and Governance) investing as a major influence in the next decade. The chart above shows how important ESG investing is to millennials and women, in particular. As more wealth transfers to these groups from older generations (women tend to live longer than men), more women will flow towards ESG themed investments. By 2020, millennials will account for 16% of global wealth, and that number will continue to grow over the next decade.   The sector is already growing faster than anticipated, and Bank of America expects it to swell to $20 trillion in assets under management over the net two decades. For reference, $20 trillion is 80% the size of the entire S&P 500.     chart courtesy Bank of America Research   The chart above shows the 17 Sustainable Development Goals issued by the United Nations for 2030. ESG Investing is closely aligned with many of these goals, and 193 countries, including the U.S., signed on to them in 2015 when they were first issued.  In the 2020s, climate-risk-related ESG reporting will start to take shape. Nearly 2500 institutional investors have already signed on to the UN Principles for Responsible Investment (UN PRI) and will be required to comply with the Task Force on Climate-related Financial Disclosures (TCFD) from 2020. That means that a lot of the world's biggest institutional investors are going to have to report the environmental impact of their investments to their investors, who will have trillions of dollar to put to work.    I bring this to your attention because I personally find it important, but also because it is a massive investing trend that will shape the financial world for the next several decades.   Institutional Investors on the Next Financial Crisis Speaking of institutional investors, Natixis Investment Managers just rolled  their 2020 Investing Report, in which they surveyed their counterparts in money management on a variety of issues. This one caught my eye. Nearly 60% of those surveyed say the next financial crisis will happen in the next 1-3 years. Their biggest concerns for 2020: Volatility Interest rates Credit crunch Liquidity Deflation   A healthy dose of paranoia is a good thing for an institutional money manager to have. As an individual investor, you need to keep these in mind, but set up your portfolio and financial plan in the best way that suits you and where you are in life.   chart courtesy Natixis     More News: Why Record $2.4 Trillion Debt Binge Could Burn Investors in 2020 Almost Time to Sell FAANG Stocks Beyond Meat Retests Lows After Lukewarm Analyst Initiation chart courtesy YCHARTS   Travel booking site Expedia Group jumped 6.3% today after its CEO and CFO were expelled after disagreements with the board chairman. Expedia was spunoff from IAC, the parent company of Investopedia. Oil prices rose ahead of the upcoming OPEC meeting, sending a wide swath of energy companies higher. Among the winners were Pioneer Natural Resources, Diamondback Energy, and EOG Resources, which rose 5.7%, 4.7%, and 4.7%, respectively.    Cloud software firm Salesforce dropped 3.2% after it reported guidance below expectations. Technical consulting firm Jacobs Engineering Group dropped 2.6% and utility firm NRG Energy dropped 2.2% Word of the Day Environmental, Social, and Governance (ESG) Criteria Environmental, social and governance (ESG) criteria are a set of standards for a company's operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company's leadership, executive pay, audits, internal controls, and shareholder rights.     Image Source: Burger King    Today in History December 4, 1954 On this day in 1954, the first Burger King, then known as Insta-Burger King opened in Miami. The founders, James McLamore and David Edgerton sold their first franchises in 1959. The company was bought by The Pillsbury Company in 1967, which was in turn bought by Grand Metropolitan. It was sold to a consortium of private equity investors in 2002, and then was taken over by 3G Capital in a leveraged buyout in 2010. It briefly went public again when it merged with Tim Hortons in 2014, and became Restaurant Brands International. The company now has about 14,000 stores in almost 100 countries.   Source: https://www.britannica.com/topic/Burger-King-Corporation How can we improve the Market Sum? Tell us at marketsum@investopedia.com Enjoy the Market Sum? Share it with a friend.   Click to Share   Or share the link below to invite friends to sign up. https://link.investopedia.com/join/53o/00-fwd-marketsum CONNECT WITH INVESTOPEDIA Email sent to:  mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here.   114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC. All Rights Reserved | Privacy Policy