Market and Economic Commentary - Week Ending 02/14/2020
Market and Economic Commentary - Week Ending 02/14/2020
US Stock Markets closed higher for a second week in a row,
as upbeat fourth quarter results and the strength of the US economy overshadowed
fear of the coronavirus.
Returns in the Markets for the week ending 02/14/2020 were
as follows:
US
Major Market Indexes (The first number is each
category in the 1-week performance. The second number is the year-to-date
performance)
Dow Jones 30 Industrial Average (+1.02%, +3.01%). S&P
500 (+1.58%, +4.62%). NASDAQ Index (+2.21%, +8.45%). US Small-Cap Index (+1.83%,
+1.11%). CBOE Volatility Index (VIX), or Fear Gage, (-11.57%, -0.73%).
US Sector ETFs (The
first number is each category in the 1-week performance. The second number is
the year-to-date performance)
Communication Services (+1.93%,
+6.13%). Consumer Discretionary (+2.63%, +5.00%). Consumer Staples (+0.82%, +2.87%%).
Energy (+1.11%, -9.09%). Financial (+0.81%, +1.27%). Health Care (+0.86%, +2.03%). Industrials (+1.18%, +3.89%).
Materials (+0.70%, -1.48%). Real Estate (+4.86%, +8.30%). Technology (+2.28%, +11.23%).
Utilities (+2.62%, +8.93%%).
Global
Market ETFs (The first number is each
category in the 1-week performance. The second number is the year-to-date
performance)
ACWI
all-country World index (+1.32%, +2.76%). ACWX all-country World index ex US (+0.80%,
-0.43%). AAXJ all-country Asia ex Japan (+2.39%, -0.53%). EWJ Japan (-1.72%, -1.33%). EZU
Eurozone (+0.74%, +0.05%). ILF Latin America 40 Index (+1.01%, -5.68%). EEM
Emerging Markets (+1.94%, -1.49%).
Commodities ETFs (The first number is each
category in the 1-week performance. The second number is the year-to-date
performance)
DBC Commodity Tracking Index (+0.83%,
-8.15%). DBA Commodities Agriculture (+0.63%. -3.74%). USO United States Oil (+3.50%,
-14.52%). DBB Base Metals (+0.57%, -5.29%). IAU Gold (+0.87% +4.34%). BDRY Dry
Bulk Shipping (+0.00%, -40.29%).
Bond
Market
In
the bond market, the 10-year US Treasury interest rate went from 1.582 on February 7, to
1.588 on February 14.
Currencies
In
currencies, the US Dollar DXY Index went from 98.57 on February 7, to 99.00 on
February 14.
Other
Significant Events
Wall
Street was little changed on Friday following Thursday’s losses, as investors
digested coronavirus outbreak updates and domestic macro data. Abroad, China
confirmed 121 additional deaths and 5090 new cases of the virus. On the
economic side, core retail sales were unchanged in January. Meanwhile, CNBC
reported the White House is considering tax incentives for people in the US to
purchase equities. The Dow Jones lost 25 points or 0.1% to 29398. The S&P
500 gained 19 points or 0.2% to 3380. The Nasdaq climbed 19 points or 0.2% to
9731.
The University of Michigan consumer sentiment index in the
US increased to 100.9 in February of 2020 from 99.8 in January, beating market
forecasts of 99.5, preliminary estimates showed. It is the highest reading
since March of 2018 amid improving expectations (92.6 from 90.5) while the
gauge for current conditions declined (113.8 from 114.4). Inflation
expectations for the year ahead were steady at 2.5 percent while those for the
five-year outlook fell to 2.3 percent from 2.5 percent. Current personal
finances as well as evaluations of the national economy each posted large
gains, while consumers' views on buying conditions for household durables
posted a significant loss.
Industrial production in the United States fell 0.3
percent from a month earlier in January 2020, following a 0.4 percent decline
in December and compared to market expectations of a 0.2 percent drop.
Manufacturing output edged down 0.1 percent led by a 0.5 percent contraction in
durable goods output, as production of aircraft and machinery decreased. Motor
vehicles and parts output, on the other hand, increased. Nondurable
manufacturing rose 0.3 percent, with almost all of its component categories
posting gains in particular petroleum and coal products, and plastics and
rubber goods. Utilities output slumped 4 percent due to unseasonably warm weather,
while mining grew 1.2 percent.
The Eurozone economy grew only 0.1 percent in the fourth
quarter of 2019, below 0.3 percent expansion reported in the previous
three-month period, a second estimate showed. That was the weakest pace of
growth since a 0.4 percent contraction in the first quarter of 2013. Among the
bloc's largest economies, German GDP stalled, while France and Italy contracted
0.1 and 0.4 percent respectively. On the other hand, Spain's economy expanded
0.5 percent. Germany's gross
domestic product unexpectedly showed no growth in Q4 2019, after an upwardly
revised 0.2% growth in Q3 and missing market expectations of a 0.1% advance, a
preliminary estimate showed. Both household consumption and government spending
slowed markedly, while investment in machinery and equipment was down.
Meanwhile, exports fell slightly, while imports rose, suggesting that net trade
had a negative impact on the economy. Year-on-year, the economy expanded by a
calendar-adjusted 0.4 percent in Q4, following an upwardly revised 0.6% growth
in Q3 and matching forecasts. On an unadjusted basis, the economy expanded
0.3%, slowing from an upwardly revised 1.1% expansion in Q3. Considering full
2019, the economy expanded 0.6%, well below 1.5% in 2018 and the lowest since
2013.
The Baltic index has been trading below 450 in February,
the lowest level since March 2016 with the capesize segment falling to all-time
lows amid weak demand for ships and muted activity in China, whose demand
accounts for almost 40% of total dry seaborne imports. The dry bulk index,
which can be an early indicator of slowing global growth, has plunged by over
83% since early September as an 18-month trade war between the US and China and
the coronavirus outbreak weighed on exports and manufacturing, while higher
fuel costs under the new International Maritime 2020 regulations led to a
significant rise in the cost of operating cargo ships. The last time it fell by
90% in just a few months was in 2008 during the Great Recession.
Minutes from the Federal Reserve, ECB, RBA and RBI will be
in focus next week, while central banks in China, Turkey and Indonesia will be
deciding on interest rates. On the economic data front, flash PMI surveys for
the US, UK, Eurozone, Japan and Australia could provide an insight into the
early impact of the coronavirus outbreak on the global economy. Other figures
to follow include US housing data; UK jobs report, inflation and retail trade
data; Japan Q4 GDP and trade balance; and Australia employment numbers.
Thank
you and please stay tuned for more upcoming reports.
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Len Martinez is a Financial Consultant. Information in the
"Bull Valley Advisor” newsletter should not be considered as investment
advice or an offer to buy or sell securities. Data is derived from sources considered
to be reliable including Morningstar, StockCharts.com, YAHOO Finance, FINVIZ,
TipRanks, Investing.com, ECRI, OCED, gurufocus, Crestmont Research, Trading
Economics and S2O. Results are not guaranteed. Len Martinez is not an RIA. The
data is shown for informational purposes and should not be considered
investment advice or an offer to buy or sell securities.
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