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In the Markets – Week-Ending February 10th

by Peter J. Creedon

Newsletter: In the Markets – Week-Ending February 10th
Crystal Brook Advisors
We Make Financial Planning Crystal Clear

United States: Total construction spending fell 0.2 percent in December as the 1.7 percent decline in the public sector weighed on growth. Overall residential construction rose a modest 0.4 percent, while nonresidential construction outlays slipped 0.7 percent on the month. (1)  Private construction spending rose for the third-straight month, with residential edging 0.5 percent higher due to increases in new single- and multifamily construction offsetting a slight decline in home improvement. Private nonresidential was flat in December, which still bodes well for our forecast of 5.5 percent growth in 2017 in nominal terms as commercial construction continues to show sizeable gains. (1)

Europe: Stronger economic growth hasn’t kindled voters’ enthusiasm for the bloc or its common currency. Other worries like immigration and terrorism now trump (pun unintended) economic ones, as the latest Eurobarometer survey showed. And the euro remains an easy surrogate for all that seems to be going wrong with the European project. Populist parties running on anti-euro tickets are on the rise in the Netherlands, France, and Germany, which all vote on national leadership this year. Questions about the future of the currency union are as rife today as they were during the depth of the crisis. (2)

Asia: New Zealand’s central bank chief on Thursday warned of a possible inflation shock in the U.S. and much higher interest rates if Mr. Trump rolls out a program of protectionist policies. Graeme Wheeler, governor of the Reserve Bank of New Zealand, said recent comments from the Trump administration calling for higher tariffs on imports from China and Mexico would only increase prices in the U.S. and force the U.S. Federal Reserve to clamp down through tighter policy. (3)  “It would raise inflation rates in the U.S. The Federal Reserve would need to push harder against rising inflation,” Mr. Wheeler said Thursday, after the bank kept its benchmark rate at a record low 1.75%. Sharply rising U.S. interest rates would also strengthen the U.S. dollar, he said. (3)

Latin America: US President Donald Trump kicked off his presidency announcing anAmerica Firsthard-line approach of governing. And after several executive orders signed within his first week, he seems to be on track to see it through. But growing tensions between the United States and Mexico are not all that await President Trump when it comes to Latin America. As leader of the free world, he also faces a deepening recession in Brazil, an economic disaster in Venezuela, a desperate migrant crisis in Central America and potential return to frosty relationship with Cuba. (4)

Monday 2/6
  • Asian markets were mostly higher on Monday, as investors try to make sense of U.S. President Donald Trump’s policy noise. (5)
  • The dollar index remained below the 100 handle, to trade at 99.804 during Asian time against a basket of currencies. The dollar has been flailing ever since the Trump administration made its preference known for a weaker dollar. (5)
Tuesday 2/7
  • Stocks gave up early gains but ended in positive territory Tuesday, with the Nasdaq hitting a new all-time closing high. (6)
  • Climbing the same percentage was the Dow Jones industrial average, up 38 points to finish at 20,090.29. The S&P 500 finished fractionally positive after briefly nosing into the red about mid-session. (6)
Wednesday 2/8
  • The Nasdaq COMP, +0.58%  rose 8.24 points, or 0.2%, to close at 5,682.45, and the Dow DJIA, +0.59% fell 35.95 points, or 0.2%, to end at 20,054.34. J.P. Morgan Chase & Co. JPM, +1.44% Goldman Sachs Group Inc. GS, +1.61%  and Visa Inc. V, +0.58%  were notable decliners. (7)
Thursday 2/9
  • Stocks logged solid gains on Thursday as both the Dow Jones Industrial Average(DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC)pushed further into record territory, rising more than 0.5%. (8)
Friday 2/10
  • U.S. stocks traded in record territory Friday, as investors continued to take encouragement from President Donald Trump’s pledge to move quickly on changes to the tax code. (7)

Market Close

  • The Dow Jones Industrial Average DJIA, +0.48%  added 100 points, or 0.5% to 20,272, led by gains in Nike, Inc. NKE, -0.02%  and Caterpillar Inc CAT, +0.01% both up more than 1%. The blue-chip index is on track for a 1% weekly gain. (7)

Contributor: Thomas Padula

Sources:  (1),Wells Fargo Economics Group (2), Politico (3), Wall Street Journal (4),CNN (5), CNBC (6), USA Today (7) MarketWatch ,(8), Fox Business