In this week’s recap: home sales slip, the Fed may be discussing
an end date for its balance sheet reduction, leading indicators flash weaker
signals, and equities continue to climb.
Weekly Economic Update
Presented by Troy L Thompson, CFP January
30, 2019
HOME
SALES QUICKLY FALTER
Seldom do existing home sales
fall 6.4% in a month, but that was what happened in December. National
Association of Realtors economist Laurence Yun called the drop a reflection of
“consumer search processes and contract signing activity in previous months
when mortgage rates were higher than today,” and noted that the housing market
could be poised for a spring rebound. Year-over-year, the NAR noted, resales
were down 10.3%. The median existing home sale price was $253,600 last month,
up 2.9% from December 2017.1
IS
A SUNSET COMING FOR THE FED’S BALANCE SHEET RUNOFF?
On Friday, the Wall Street
Journal stated that Federal Reserve policymakers are reportedly considering
an end date for the unwinding of the central bank’s huge bond
portfolio. Investors will, no doubt, scrutinize the Federal Open Market
Committee’s January 30 monetary policy statement for any intimations about this.
In gradually shrinking its balance sheet over the last 15 months, the Fed has affected
the level of liquidity within the financial markets.2
LEADING
INDICATORS RETREAT
The Conference Board’s monthly index of leading indicators
descended a tenth of a point in December. A month earlier, the gauge rose 0.2%.
In a note accompanying the release of the data, the CB said this might be a
hint that the economy may “decelerate towards 2% growth by the end of 2019.”3
A
SHORT AND POSITIVE WEEK ON WALL STREET
All three major U.S. equity benchmarks posted slight gains this
past 4-day trading week, adding to the extended rally that began after
Christmas. At Friday’s close, the S&P 500 was up 7.20% month-over-month,
and the Dow Jones Industrial Average was on a 5-week winning streak. Friday’s
sudden agreement between President Trump and Democratic congressional leaders
to end the partial federal government shutdown was but one positive factor
influencing stocks. Some key earnings announcements surprised to the upside:
China’s government said that it would inject $37 billion worth of liquidity
into its money markets, and investors heard that the Fed might be thinking of
wrapping up the unwinding of its balance sheet sooner rather than later.4,5
T I P O F
T H E W E E K
At most businesses, sales and revenue ebb and flow across the year. Some astute short-term budgeting may help your business better manage the lean times. Start with a list of your essential, month-to-month costs, and see if you can plan to reduce any extra costs during the slow months.
THIS WEEK
The Internal Revenue Service begins accepting
2018 individual tax returns on Monday; on Wall Street, investors respond to Q4
results from Caterpillar, Celanese, and Whirlpool. | Tuesday, the Conference Board
releases its January consumer confidence index, and 3M, AMD, Allergan, Amgen,
Apple, Biogen, Corning, eBay, Harley-Davidson, Lockheed Martin, Nucor, Pfizer,
Pulte Group, Regis Corp., Rockwell Automation, Verizon, and Xerox announce earnings.
| The Federal Reserve issues its latest policy statement on Wednesday, with a
press conference afterward; ADP presents its January payrolls report, the NAR
offers its latest pending home sales index, and the earnings roll call includes
Alibaba, Ally Financial, Ameriprise Financial, Anthem, AT&T, Avery
Dennison, Boeing, Facebook, General Dynamics, McDonalds, Microsoft, Mondelez
International, PayPal, Qualcomm, Royal Caribbean, Siemens, Sirius XM, Tesla,
U.S. Steel, and Visa. | On Thursday, December consumer spending numbers are out
along with earnings from Aflac, Altria Group, Amazon, Celgene, Charter
Communications, ConocoPhillips, DowDuPont, GE, Mastercard, Nokia, Northrop
Grumman, Parker Hannifin, Raytheon, Royal Dutch Shell, Sherwin-Williams,
Sprint, Symantec, UPS, and Valero Energy. | Friday, Wall Street interprets
January jobs data, the final January University of Michigan consumer sentiment
index, ISM’s newest manufacturing PMI, and earnings from Aon, Chevron, Cigna,
ExxonMobil, Honda, Honeywell International, Merck, Sony, and Weyerhaeuser.
Q U O T E O F T H E W E E K
“Success is really about being ready for
the good opportunities that come
before you.”
Eric schmidt
|
MARKET
INDEX
|
CLOSE
|
WEEK
|
Y-T-D
|
|
DJIA
|
24,737.20
|
+0.80
|
+6.04
|
|
NASDAQ
|
7,164.86
|
+0.81
|
+7.98
|
|
S&P
500
|
2,664.76
|
+0.58
|
+6.30
|
|
TREASURY
|
CLOSE
|
WEEK
|
Y-T-D
|
|
10 YEAR NOTE
|
2.76
|
-0.03
|
+0.07
|
Sources:
wsj.com, investopedia.com, treasury.gov - 1/25/195,6,7,8
Indices are unmanaged, do not incur fees or
expenses, and cannot be invested into directly. These returns do not include
dividends. Weekly and year-to-date market index returns are expressed as
percentages. 10-year Treasury note yield = projected return on investment,
expressed as a percentage, on the U.S. government’s 10-year bond. Weekly and
year-to-date 10-year Treasury note yield differences are expressed in basis
points.
T H E W E E K L Y
R I D D L E
All around you in the day,
and you will notice it in the dark.
You can see it, but you will never hear it. What is it?
LAST
WEEK’S RIDDLE: Round like an orange, deep like a cup, set in the earth, and
nothing can pull it up. What is it?
ANSWER:
A well.
Troy L Thompson, CFP may be
reached at 515-432-5421 or troy@thompsonfinancialinc.com
www.thompsonfinancialinc.com
www.thompsonfinancialinc.com
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Troy Thompson, CFP
DBA: Thompson Financial, Inc.
and Hanson Asset Strategies
Securities offered through
FIRST HEARTLAND CAPITAL, INC.
Member FINRA & SIPC.
Thompson Financial is not affiliated with
FIRST HEARTLAND CAPITAL, INC.
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CITATIONS:
1 - bankingjournal.aba.com/2019/01/existing-home-sales-dipped-6-4-percent-in-december/
[1/22/19]
3 - reuters.com/article/us-usa-economy-unemployment/us-weekly-jobless-claims-lowest-since-1969-idUSKCN1PI1SM
[1/24/19]
4 - marketwatch.com/story/us-stock-futures-point-to-another-upbeat-day-for-wall-street-led-by-techs-2019-01-25
[1/25/19]
5 - markets.wsj.com [1/25/19]
6 - investopedia.com/markets [1/25/19]
7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
[1/25/19]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll
[1/25/19]
