Markets: It was an up week, with the Fed becoming more dovish, oil rising on the back of OPEC production cuts, and hopes for progress in the U.S.-China trade talks.
High Dividend Stocks: These high yield stocks go ex-dividend next week – CNXM, CPLP, MMLP, MMP, AHC, CDR.
Volatility: The VIX fell -7% this week, ending at $16.14.
Currency: The U.S. fell vs. most major currencies this week. except the pound and the Swiss Franc.
Market Breadth: 21 DOW 30 stocks fell this week, vs. 26 rising last week. 74% of the S&P 500 rose this week, vs. 78% rise last week.
Economic News:
“The dollar slid and equities surged on Wednesday, fueled at first by Boeing (NYSE:BA) and Apple’s results and later by the Federal Reserve pledging to be patient with future interest rate hikes, a change in tone stock investors interpreted as a buy signal. The Fed held interest rates steady at the end of a two-day meeting in which it struck language in a December policy statement that projected “some further” rate hikes would be appropriate in 2019.” (Reuters)
“The administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.
The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84% of respondents said they had not changed plans. That compares to 81% in the previous survey published in October.” (Reuters)
“Tariffs will limit growth of U.S. real gross domestic product by an average of 0.1 percent each year for the next 10 years if they remain in place at current levels, the Congressional Budget Office (CBO) said on Monday. The nonpartisan agency said growth of GDP – a measure national economic output – would be curbed by a drop in consumer spending power and a fall in U.S. exports. Those declines would be only partly offset by an expected increase in output as domestic goods replace imports, the CBO said in its budget and economic outlook for 2019-2029.”
“The tit-for-tat tariff war with China has cost both countries billions of dollars. Global stocks were down on Monday after data showed profits at China’s industrial firms shrank for a second straight month in December, the latest indication of the trade war’s toll.Real GDP is expected to grow by 2.3 percent in 2019. That is slower than 2018’s 3.1 percent growth in real GDP but still faster than expected, the CBO said. After this year, annual growth is expected to average 1.7 percent through 2023, below the office’s projection of potential growth.” (Reuters)
“The U.S. economy was expected to lose $3 billion from the partial federal government shutdown over the President’s demand for border wall funding, congressional researchers said on Monday as 800,000 federal employees returned to work after a 35-day unpaid furlough.
The nonpartisan Congressional Budget Office (CBO) said the cost of the shutdown will make the U.S. economy 0.02 percent smaller than expected in 2019. More significant effects will be felt by individual businesses and workers, particularly those who went without pay. Overall, the U.S. economy lost about $11 billion during the five-week period, CBO said. However, CBO expects $8 billion to be recovered as the government reopens and employees receive back pay.” (Reuters)
“”The economy added 304,000 jobs in January, the 100th consecutive month of payroll gains. Unemployment ticked up to 4 percent, possibly a shutdown-related anomaly. 304,000 jobs were added last month. Economists had expected a gain of about 172,000.” (NY Times)
Week Ahead Highlights: The Q4 ’18 earnings season continues next week, with DIS, CLX, AMGN, and GM reporting, among many others.
Next Week’s U.S. Economic Reports:
Sectors: Energy led the pack this week, with Telecoms trailing.
Futures:
“Oil prices rose for a third day, extending a rally this month as an output cut by the Organization of the Petroleum Exporting Countries, Russia and others took effect.” (Reuters)
WTI Crude rose 21.93% this week, finishing the week at $55.37, while Natural Gas fell -7%.
