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In the Markets – Week-Ending March 18

by Peter J. Creedon

Newsletter: In the Markets – Week-Ending March 18
Crystal Brook Advisors
We Make Financial Planning Crystal Clear

United States: Uncertainties abound, while the job market looks solid and the risk of recession has diminished in the Fed’s view, the strength of the economy remains uncertain.(1) The Islamic State militant group has committed genocide against minority Christians and Yazidis as well as Shi’ite Muslims, U.S. Secretary of State John Kerry said.(2)

Europe: European Union leaders agreed to a plan with Turkey that would curb migration flows across the Aegean Sea into Greece in exchange for trying to accelerate Turkey’s path to membership in the bloc.

Asia: The Bank of Japan’s negative interest rate policy is making it more expensive for domestic banks to hedge dollar investments, threatening to slow their escape from negative rates into U.S. currency debt.(3)

Monday 03/14

• World oil demand is expected to rise by 1.25 million barrels a day in 2016 to average 94.23 million barrels a day, according to OPEC’s monthly oil report.(4)

Tuesday 03/15

• Final demand goods declined for the third consecutive month and were responsible for the 0.2 percent slide in headline producer prices in February, as services prices remained steady.(5)
• Business inventories edged up in January, but the stock building was driven by another drop in sales. With inventories still elevated relative to sales, we expect the inevitable right-sizing to be a drag on near-term GDP.(6)

Wednesday 03/16

• CPI inflation fell 0.2 percent in February, but the decline was predominantly due to energy prices which are already beginning to turn around. Core inflation posted another solid gain, keeping a June rate rise in play.(7)
• Industrial production fell 0.5 percent in February, giving back more than half of the prior monthly gain. In what has become a pattern, utilities and mining accounted for the loss, while manufacturing edged up.(8)

Thursday 03/17

• The current account deficit narrowed from an upwardly-revised reading in Q3, but came in above consensus expectations. The deficit in full-year 2015 rose about $100 billion as exports fell more than imports.(9)
• The LEI increased 0.1 percent in February, largely due to the initial jobless claims component. Indicators from the factory sector continue to point to a challenging environment for manufacturing.(10)

Friday 03/18

• Emerging market equity funds reported inflows of $1.37 billion in the week ending March 16 .(11)

 

Market Close
The S&P 500 and the Dow industrials on Friday closed at their highest levels of 2016, buoyed by a rally in health-care and financial stocks. All three stock benchmarks booked a fifth straight weekly gain. Both the S&P 500 and the Dow industrials ended in positive territory for the year, while the Dow booked six days of gains—the longest winning streak since early October. The S&P 500 SPX, +0.44% gained 9 points, or 0.4%, to 2,049, led by a sharp advance in health-care and financials stocks. Telecom and utilities were leading the losses. The Dow Jones Industrial Average DJIA, +0.69% gained 118 points, or 0.7%, to 17,599, led by strong gains in financial giants Goldman Sachs Group Inc. GS, +3.07% and J.P. Morgan Chase & Co. JPM, +0.02% Meanwhile, the Nasdaq Composite COMP, +0.43% ended up 21 points, or 0.4%, at 4,795. Stocks held on to their gains despite a reversal in oil prices CLJ6, -2.21% which erased earlier gains turning negative after data from Baker Hughes BHI, +0.00% showed that the weekly number of active U.S. oil rigs edged higher for the first time this year.(12)

Contributor: Felipe Vargas-Zúñiga

Sources:
(1) Source: Federal Reserve Board, U.S. Department of Commerce, Bloomberg LP and Wells Fargo Securities, LLC
(2) Source: Reuters
(3) Source: Bloomberg
(4) Source: MarketWatch
(5) Source: U.S. Department of Labor and Wells Fargo Securities, LLC
(6) Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
(7) Source: U.S. Dept. of Labor, U.S. Dept. of Commerce, Federal Reserve System and Wells Fargo Securities, LLC
(8) Source: Federal Reserve Board and Wells Fargo Securities, LLC
(9) Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
(10) Source: The Conference Board and Wells Fargo Securities, LLC
(11) Source: Barron’s
(12) Source: MarketWatch