One of the potential disruptors of the generally positive economic news surfaced in the form of a viral outbreak in China last week. Known as the coronavirus, as of this morning, there were 895 cases in mainland China (mostly in the Wuhan area) and 26 deaths, for a mortality rate of less than 3 percent. There were also at least 20 other cases around the world, including 1 case here in the U.S. The comparison that is being made is to the last major new disease from China, SARS, in 2003.

With the recent signing of the phase one trade deal with China, the sense has been that everything is all set, and we can now move on. There is some truth to this belief, as the deal is better than nothing. Still, the agreement leaves many issues unresolved and even creates some new ones.

The North American Free Trade Agreement (NAFTA) is just about to be formally replaced by the United States–Mexico–Canada Agreement (USMCA). This news has generated both headlines and optimism in recent weeks, as a sign that progress can be made on trade issues. With the approval of the agreement by both the House and the Senate here in the U.S., and the pending signature by President Trump, it looks like the USMCA will become the law of the land very soon. But what does this mean?

Brad here. There is a lot that goes in to investing. One of the underappreciated problems, though, is simply how to be most effective with the limited time and energy we have. Today’s post from Chris Stuart, a senior analyst in Commonwealth’s Investment Management and Research group, looks at how we can do better at everything over time, which certainly applies to investing. I found his thoughts to be both interesting and helpful. I think you will, too.

Brad here. When interest rates in the overnight lending market (known as the repo market) spiked in September, there was a real fear that it was a sign of something much worse. Commonwealth has been following this development closely, and recently we’ve been receiving another wave of questions. Nick Follett, manager of fixed income on our Investment Management and Research team, is here to explain what has happened since the spike and whether the risks are still real. Spoiler alert—they are not. Over to you, Nick!

Brad here. One of the major discussions we have internally is how to allocate investments, with one of the biggest open questions being whether growth or value will do better going forward. Here is a detailed discussion of that by Chris Fasciano, a portfolio manager on Commonwealth’s Investment Management and Research team. Our internal asset management team stewards more than $7 billion in client assets, and this is a rare chance to pull back the curtain and listen to the discussion. Over to you, Chris!

Last week, a reader had an interesting question in response to the Homer Simpson economic video. He wondered, given the number of jobs that Homer Simpson has had and how compensation has changed over time, is there a good analysis of income versus inflation? I didn’t know of any such analysis, so I decided to come up with one. Since much of the analysis around this question is less than clear (to be frank), I also decided to use it as a primer on how to read through economic statistics. As always, caveat emptor!

As I do every month, it’s time to take a look back at what happened in the previous one and what it could mean going forward. With the start of a new year, we have a lot to cover.

Brad here. Today, Rob Swanke, an analyst with Commonwealth’s Investment Management and Research team, shares his insights. Enjoy!

It’s 2020, the beginning of a presidential election year. As the months unfold, the election will likely become the primary market risk to worry about for many people. Democratic primary voting will begin in February with the Iowa caucuses, but only 4 percent of the delegates will be chosen that month. The party’s direction won’t begin to unfold until March 3, when 34 percent of the delegates will be chosen by 14 states. But we still won’t have clarity at that point, as delegates are distributed proportionally for each state by the Democratic Party. With several candidates polling in the double digits, a lot of uncertainty regarding the Democratic nominee may exist right up to the July convention. Although the bull market has lasted more than a decade, will valuations keep moving higher in this uncertain political climate?

The news this morning that a top Iranian commander was killed in a U.S. drone strike sent global markets reeling. According to news reports, Iran is now vowing to retaliate, which means terrorism and cyberattacks are likely. Here in the U.S., apparently, Congress was not notified of the strike ahead of time. The heightened risk factors we must now consider include increased domestic political dysfunction, a rising risk of military action (either by us or against us in an already troubled area), and a probable disruption of the oil markets.