Major stock indices for the week were mixed.  While weaker retail sales, housing, and industrial production and a fall in producer prices, raised hopes that the FED is nearly done hiking rates, the labor market remains very strong.  Also, 4^th quarter corporate earnings, released so far, are contracting. 

Several FED members this week said they favored a 0.25% rate hike at the next meeting ending in early February which offset much of the negative economic and earnings news.

The Bank of Japan met and left monetary policy unchanged with the short-term interest rate of negative 0.1% and the 10-year treasury between 0.25 to 0.5% surprising many economists given inflation running nearly double the bank’s target.

Treasury bond yields rose with the 30-year bond at 3.655% and the 10-Year note at 3.482%.  30-year mortgage rates fell to 6.15%.  Crude oil rose to $81.40 a barrel and natural gas fell to $3.01 per MMBTUs.  The U.S. dollar index fell to 102.00 and gold rose to $1928.90 an ounce.

• China reported:
  • Its gross domestic product rose 3.0% for the year 2022, its slowest growth since 1976.
  • Its population fell slightly in 2022 for the first time since the famine of the early 1960s as birth rates fell.
    • Births fell from 10.62MM in 2021 to 9.56MM in 2022 despite China having no restrictions on the number of children couples can have.
• Japan reported:
  • Consumer prices have risen 4.0% in December from a year ago, exceeding the Bank of Japan’s target for nine straight months.
  • Core prices, excluding volatile food and energy, have risen 3.0% from a year ago.
• The U.K. reported:
  • Consumer prices have risen 10.5% in December from a year earlier, down from a peak of 11.1% year over year in October.
  • Core prices, excluding food, energy, alcohol and tobacco, were up 6.3% in December from a year ago.
• The National Association of Realtors reported that existing home sales fell 1.5% in December. 
  • For the calendar year of 2022 existing home sales fell 17.8%, to the lowest level since 2014.
  • The median home price sold was $366,900 a decline from the peak of $413,800 but are still up 2.3% from a year ago.
• The Commerce Department reported:
  • Retail sales fell a seasonally adjusted 1.1% in December. 
    • November’s retail sales were revised down to a negative 1.0%.
  • Housing starts fell 1.4% in the month of December.
    • Single family housing starts rose 11.3% in the month of December.
      • From a year earlier single-family starts have fallen 25.0%.
    • Multi-family (five or more-units) housing starts  fell 18.9% in December.
      • From a year earlier multi-family starts have fallen 16.3%.
  • Home building permits, an indicator of future housing starts, fell 1.6%.     

• The Federal Reserve reported:
  • Industrial production fell 0.7% in December.
    • Manufacturing fell 1.3%.
    • Utilities rose 3.8% due to cold weather.
    • Mining, including oil and gas production, fell 0.9%.
  • For the 4^th quarter Industrial Production fell 1.7%.
• The Labor Department reported:
  • Producer prices fell 0.5% in December.
    • Excluding volatile food and energy, prices rose 0.1%.
    • From a year earlier, producer prices rose 6.2%, down from 7.3% in November.
    • Excluding volatile food and energy, core prices have risen 4.6% year over year down from 4.9% in November.
  • Seasonally adjusted first-time claims for unemployment were 190,000, down from 205,000 in the prior week.

• • • The 4-week moving average of claims, designed to smooth out volatility, was 206,000 down from a revised 212,500 in the prior week.
    • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
• The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf .  Also, the EIA reported in the prior week:
  • Field production of crude oil rose was unchanged at 12.2MM BPD.
  • Natural gas storage fell 82BN cubic feet and is about at the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs fell 10 to 613.  The number of active natural gas rigs rose 6 to 156.
• Factset reported, with 11% of S&P500 companies reporting, that the blended earnings decline was 4.6%.

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

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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.