The Past Week in the Markets

31 Dec

It was a white knuckled ride in the markets this holiday shortened week.  A sharp drop during the half day session on Monday was followed by a much bigger gain on Wednesday.  This left U.S. stocks with substantial gains for the week after declining for several weeks.  Still, even on good days, we saw market indexes swing between large gains and large losses.  Foreign stocks ended the week with more modest gains.  Amazingly, there was little news to move the markets this week.  I’m thinking stop losses and program trades on
Friday and Monday created an oversold situation that was ripe for bargain hunters to come in on Wednesday and Thursday.  Also Mastercard SpendingPulseTM released a report on Wednesday that showed retail sales were up 5.1% from November 1st to December 24th from the same period last year.  Online sales rose 19.1% with brick and mortar retailers seeing much smaller gains.

We ended the week with little change to the uncertainty that has afflicted the markets.   The trade dispute with China is still likely to linger until close to the March 1 deadline.  There was no progress in resolving the partial government shutdown which pushes things to after the first of the year.  The disputed border security funds represent a very small percent of government spending, not even a drop in the bucket.

Never the less, the U.S. economy is still growing at a good clip with 4.2% annual growth in the second quarter and 3.4% growth in the third quarter.  Jobs are plentiful.  Wages are increasing but not too fast and price increases are near the FED’s target of 2%.

U.S. Treasury yields fell for the week with the 10-year Treasury yielding 2.718%.  The U.S. dollar weakened over the heightened uncertainty and gold prices rose on the weaker dollar.  Crude oil ended the week lower.

Natural gas prices were also lower this week on milder than normal weather.  Interestingly, as the U.S. is still a net exporter of liquified natural gas we still import LNG due to pipeline constraints and a 98 year old law that keeps foreign ships from moving goods between U.S. ports.  So, if we do not have a U.S. ship available we can’t get a foreign ship to move LNG between U.S. ports.  So, while the U.S. had outbound ships of LNG this week, we also had inbound ships.  There is lots of natural gas in west Texas but no currently no pipeline to move it to the Gulf of Mexico.

In the numbers this week:

  • The S&P CoreLogic Case-Shiller home price index was unchanged in October.  From a year earlier, average home prices were up 5.5%.
  • The Labor Department reported first time claims for unemployment fell 1,000 to a seasonally adjusted 216,000.  The four week moving average of claims fell 4,750 to 218,000.
  • The Energy Information Administration weekly report is here wpsrsummary.  Also, the EIA reported
    • U.S. Crude oil production rose from 11.6MM barrels per day to 11.7MM barrels per day.
    • Storage of natural gas fell 48BN cubic feet.  Natural gas storage is below the minimum for this date during the past five years.
  • According to Baker Hughes, In the past week, the number of active oil rigs rose 2 to 885 and natural gas rigs rose 1 to 198.

Please call us if you have any questions or concerns about your accounts.

Otherwise, have a Happy New Year!

Loren C. Rex, CFP®, AIF®, MA                                                         Erik A Smith

President                                                                                                 Managing Partner

Generations Financial Planning & Wealth Management             269-441-4143

77 E. Michigan Ave, Suite 140

Battle Creek, MI  49017

Tel 269-441-4090

Carrie Fuce, Assistant 269-441-4091

Toll Free: 800-513-8180

Fax 866-381-2301

Visit our Website:  www.genfinplan.com

Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.  Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.  Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.

These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.  The Indices mentioned are unmanaged and cannot be invested into directly.