US Stocks saw strong gains this week as fears of a U.S. economic slowdown subsided. Markets were encouraged by possible easing of trade tensions. It was reported Friday that China had offered to increase imports of U.S. goods by $1TN over five years. There were also reports of debates within the Trump administration about easing some of the tariffs to show good faith, although nothing has been announced. Also, 4th quarter earnings have started and have been good with generally upbeat forecasts. New York FED president, John Williams said Friday that interest and balance sheet adjustments will depend on the economy’s performance which also lean to Friday’s rally. While no progress appears to have been made on the partial government shutdown, the Trump administration has shifted some funds to keep certain critical functions operating.
The 10 year treasury rate rose to 2.788%. Crude oil rose. The dollar rose based on improving economic sentiment and gold fell.
In the numbers this week:
- China reported
- Exports fell 4.4% in December from a year ago as tariffs weighed on the world’s second largest economy. However, for the year of 2018 exports rose 9.9%
- Imports fell 7.6% in December but were up 15.8% for 2018.
- In Q4 China reported 6.4% annualized growth and 6.6% for the year of 2018, the slowest growth since 1990.
- The Federal Reserve reported that industrial production rose a seasonally adjusted 0.3% in December. Factory output rose 1.1%. Mining output rose while utility output fell 6.3% due to warmer-than-usual temperatures.
- The Labor Department reported:
- First time claims for unemployment fell 3,000 to a seasonally adjusted 213,000 despite 10,454 federal employees filing claims. The four week moving average of claims fell 1000 to a seasonally adjusted 220,750.
- The producer-price index fell 0.2% in December. Excluding volatile food and energy, core prices fell 0.1% in December, following 0.2% rises in October and November. For calendar year 2018 producer prices rose 2.5%. The prior 12-month rate peaked at 3.4% in July and has been moderating since.
- The Energy Information Administration weekly report is here wpsrsummary. Also, the EIA reported
- U.S. Crude oil production rose from 11.7MM to 11.9MM barrels per day.
- Storage of natural gas fell 81BN cubic feet. Natural gas storage is at the lowest level for this date during the past five years but the drawdown has been less than usual due to warmer weather so far.
- Let me correct the numbers on the Baker Hughes rig counts. Due to a problem with link I was using, the 2019 data was not showing. Since the end of 2018, the number of active oil rigs fell from 885 to 852 and natural gas rigs remained at 198.
- Factset reported with 11% of S&P 500 companies reporting earnings, the blended earnings growth rate in the 4th quarter was 10.6%. 76% of companies reporting had positive earnings surprises and 56% had positive revenue surprises.
- The Commerce Department is not issuing any economic reports due to the partial government shutdown.
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Loren C. Rex, CFP®, AIF®, MA Erik A Smith
President Managing Partner
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Carrie Fuce, Assistant 269-441-4091
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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.