Markets: It was another up week, with all 4 indexes rallying, buoyed by more positive earnings reports. It was a broad-based rally, with all sectors rising.
Dividend Stocks Update: These high dividend stocks go ex-dividend this coming week: Chatham Lodging Trust REIT (NYSE:CLDT), Great Elm Capital Corp (NASDAQ:GECC), Genesis Energy LP (NYSE:GEL), Enterprise Products Partners LP (NYSE:EPD), Orchid Isla (NYSE:ORC), Prospect Capital Corporation (NASDAQ:PSEC), Stellus Capital Investment (NYSE:SCM), Tallgrass Energy Partners LP (NYSE:TEP), TransMontaigne Partners LP (NYSE:TLP), Whitestone REIT (NYSE:WSR).
Volatility: The VIX fell 1.7% this week, ending at $11.27.
Currency: The US Dollar fell vs. most major currencies again this week, with the Swiss Franc rising 3.25% vs. the USD..
Market Breadth: 23 of the DOW 30 stocks rose this week, vs. 23 last week. 77% of the S&P 500 rose, vs. 71% last week.
Economic News:
“U.S. home sales fell more than expected in December as the supply of houses on the market dropped to a record low, pushing up prices and likely sidelining some potential buyers. The National Association of Realtors said on Wednesday that existing home sales declined 3.6 percent to a seasonally adjusted annual rate of 5.57 million units last month amid decreases in all four regions.
November’s sales pace was revised down to 5.78 million units, still the highest level since February 2007. Existing home sales, which account for about 90 percent of U.S. home sales, rose 1.1 percent on a year-on-year basis in December. They increased 1.1 percent to 5.51 million units in 2017, the highest since 2006.
The NAR attributed the sales decline in December, which followed three straight months of gains, to a perennial shortage of houses at the lower end of the market.”
Sales of new U.S. single-family homes also fell more than expected in December, recording their biggest drop in nearly 1-1/2 years, likely as the boost from the replacement of flood-damaged houses in parts of the South affected by hurricanes faded.
The Commerce Department said new home sales declined 9.3% to a seasonally adjusted annual rate of 625,000 units last month. The percentage decrease was the largest since August 2016. Unseasonably cold temperatures at the end of December probably also hurt sales. (Source: Reuters)
“A weaker dollar is good for trade. In the longer term, a stronger dollar is a reflection of the strength of the U.S. economy”, U.S. Treasury secretary Mnuchin said to reporters in Davos, Switzerland.
A U.S. Treasury secretary actively embracing a weaker dollar, even for the short term, appeared to come as a shock to traders. Investors have to go back more than 20 years to the early days of the Clinton administration to find a Treasury secretary seeming to endorse dollar weakness.
“There are few more efficient ways to accelerate trade wars than to publicly denigrate your own currency, making foreign exporters suffer”, wrote Mark Grant, chief global strategist at B. Riley FBR Inc. & Wunderlich Securities, in a note. The only question is how will the foreign exporters, and everyone else, respond. (Source: Reuters)
“The euro flipped into positive territory during the European Central Bank’s news conference on Thursday, as ECB President Mario Draghi said the economy was expanding at a robust pace. Versus the U.S. dollar, the euro jumped to a new high since December 2014, last buying $1.2495.” (MarketPulse)
Earnings News: “GE said on Wednesday that U.S. securities regulators are probing a massive insurance charge it announced last week, a write-off that produced a $10-billion loss in the latest quarter. It was the latest blow to the nations largest industrial conglomerate as it struggles to reverse steep declines in its power, capital and transportation divisions. GE also forecast more weakness at its power business this year, a unit that produced 60 percent of GEs profits as recently as 2016.” (Reuters)
Week Ahead Highlights: It’ll be a big data week – the Non-Farm Payrolls report for February is due out on Friday, along with the Unemployment Rate. There will also be several consumer-related reports due out – Personal Income, Consumer Spending, Consumer Confidence, and Consumer Sentiment, in addition to the Inflation report.
Q4 earnings season rolls on, with another 10 DOW stocks reporting, including Apple Inc (NASDAQ:AAPL), Visa Inc (NYSE:V), McDonald’s Corporation (NYSE:MCD), Bank of America Corp (NYSE:BAC), and Microsoft Corporation (NASDAQ:MSFT). 25% of all S&P 500 stocks will be reporting, including Amazon.com Inc (NASDAQ:AMZN), Alphabet Inc Class A (NASDAQ:GOOGL), United Parcel Service Inc (NYSE:UPS), Facebook Inc (NASDAQ:FB), and PFE (NYSE:PFE).
Next Week’s US Economic Reports:
Sectors: It was a broad-based sector rally this week, with Consumer Discretionary and Healthcare leading, while Consumer Staples lagged, but still gained.
Futures: Crude Oil WTI Futures rose 4.6%, and are up ~ 10% in 2018. Natural Gas futures fell -.4% this week, but are up ~8% in 2018:
