Investors value a sense of predictability and security, but no new presidential administration comes to the White House with enough transparency to eliminate all concerns from investors’ minds. This was the case this past weekend as well, as investors watched the reception of our 45th president from his inauguration last Friday, to the dust up between the Trump administration and the media over the weekend, followed by his much anticipated first executive orders.
As the Trump administration hit the ground running on Monday, investors were no doubt thinking about the pace of change that would be coming from the White House, and how it may affect not only the U.S. economy but other economies around the world. The major market averages traded lower at the opening bell, with caution and concern being the overarching tone for both the stock and bond markets on Monday.
However, as coverage of President Trump’s meetings on Monday were released, first, with top U.S. CEO’s, then later with top union leader’s, that concern seemed to dissipate while lifting the stock market into the close.
As the pollical fever in Washington de-escalates in the coming weeks, investors will return to their focus to earnings season which still has a few weeks left. Many analysts still have high expectations for this earnings season, with some forecasting 4th quarter earnings growth of 32 percent. This rate of growth has not been seen since 2010 when the economy was still rebounding from the financial crisis.
Laif E. Meidell, CMT
We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster
Weekly Economic Update
LARGEST INFLATION ADVANCE IN 5 YEARS
The Consumer Price Index rose 2.1% in 2016, marking its greatest annual gain since 2011. During 2015, consumer prices only increased by 0.7%. December saw a 0.3% rise for the headline CPI and a 0.2% gain for the core CPI (which excludes food and energy costs). The core CPI gained 2.2% last year.1
MUCH MORE GROUNDBREAKING IN DECEMBER
Cold had little impact on residential construction as 2016 ended. Housing starts advanced 11.3% last month and rose 5.7% for the year. Single-family starts declined 4.0% in December, but they still improved 3.9% in 2016. Building permits were down 0.2% last month and posted a yearly gain of 0.7%.2
GOLD GOES BACK ABOVE $1,200
The yellow metal rose 1.84% week-over-week to settle Friday at $1,210.00 on the COMEX. (Silver ended the week at $17.12.) On the NYMEX, oil ended up at $52.33 as Wall Street rang its closing bell Friday, retreating 0.19% week-over-week.
MAJOR INDICES DRIFT LOWER
Stocks retreated last week, but just slightly. Across four trading days, losses trimmed the Dow Industrials by 0.30%, the S&P 500 by 0.15%, and the Nasdaq Composite by 0.32%. Friday’s settlements: Dow, 19,827.25; Nasdaq, 5,555.33; S&P, 2,271.31.
On Monday, Halliburton, McDonalds, and Yahoo! report Q4 results. December existing home sales numbers arrive Tuesday, complementing earnings from 3M, Alibaba, Capital One, Corning, D.R. Horton, Discover, Fifth Third Bancorp, Johnson & Johnson, Kimberly-Clark, Lockheed Martin, Seagate Technology, Stryker, Texas Instruments, Travelers, and Verizon. Wednesday’s earnings parade features Abbott Labs, AT&T, Boeing, Briggs & Stratton, Brinker International, Dolby Labs, Citrix, Freeport-McMoRan, eBay, Norfolk Southern, Qualcomm, Raymond James, Rockwell Automation, United Rentals, W.W. Grainger, and Western Digital. New initial claims data appears Thursday, plus December new home sales figures and earnings from Alphabet, Biogen, Bristol-Myers Squibb, Caterpillar, Celgene, Comcast, Dow Chemical, E*TRADE, Ford, Intel, JetBlue, Microsoft, Northrop Grumman, PayPal, Praxair, PulteGroup, Quest Diagnostics, Raytheon, Regis, Royal Caribbean, Sherwin-Williams, Southwest Airlines, Stanley Black & Decker, and Starbucks. Friday offers the first estimate of Q4 GDP, December durable goods orders, the final January University of Michigan consumer sentiment index, and earnings from Chevron, American Airlines, Colgate-Palmolive, Honeywell, NextEra Energy, and Whirlpool.