What we think

Newsletter: In the Markets – Week-Ending November 25th
Crystal Brook Advisors
We Make Financial Planning Crystal Clear™

United States: U.S. stocks notched fresh records, capping a week when the Dow Jones Industrial Average breached 19000 for the first time. It is the third consecutive week of gains for stocks as investors have bet on expectations for reduced corporate taxation and regulation and greater infrastructure spending. Thanks to these past three weeks, the Dow industrials are on track to end the year with 9.9% gains, which would mark their best annual finish since 2013. “Nothing is stopping the market at this point,” said Jonathan Corpina, senior managing partner at Meridian Equity Partners. On Friday, the S&P 500 rose 8.63 points, or 0.4%, to 2213.35 and the Dow Jones industrials climbed 68.96 points, or 0.4%, to 19152.14, while the Nasdaq Composite gained 18.24 points, or 0.3%, to 5398.92. All three indexes, as well as the Russell 2000, closed at records on Friday. (2) A US service member was killed in northern Syria Thursday from wounds sustained in a blast from an improvised explosive device, according to the US-led coalition fighting ISIS. This marks the first time a US service member has been killed inside Syria since a small number of US Special Forces were sent there last year to advise and assist Syrian forces battling ISIS, also known as ISIL. (1) Existing home sales rose 2.0 percent in October to a 5.6 million unit annual pace, as mild fall weather and low interest rates brought out buyers. Inventories remain tight across and continue to constrain sales.

Europe: European stocks were darting between gains and losses Friday, with oil and gas shares declining, but blue-chip equities were on track to rise for the week. The Stoxx Europe 600 shed 0.2% to 341.14 after rising earlier as it searched for firm footing. The index rose 0.3% on Thursday, a move that should help the benchmark score a weekly advance of 0.5%. That would mark the Stoxx 600’s third consecutive weekly rise. (4) The leaders of 14 European countries led by Germany have issued a statement calling for the reopening of arms control talks with Russia and warning the existing arms control regimes are crumbling. The statement said the countries are deeply concerned about the continuing erosion of the rules-based European security order, and see an urgent need to relaunch conventional arms treaty talks through “a new structured dialogue”. (5)

Asia: A measure developed by the IMF itself shows that Thailand and the Philippines may be best placed to withstand further downward pressure on the emerging currencies in Asia, based on calculations taken before the Donald Trump-induced U.S. reflation play roiled the foreign-exchange market The IMF last month forecast Thailand’s reserves at $163.3 billion at year-end, compared with the $64.9 billion needed according to the so-called Assessing Reserve Adequacy gauge, which incorporates criteria from short-term debt to money supply, imports and investment flows. The Philippines was heading for a $84 billion hoard, against a $31 billion need. (6)

Latin America: As President Xi Jinping wrapped up a trip in South America this week, the Chinese government released a strategic blueprint setting out ambitions to expand the country’s global influence and launch a “new era” in China-Latin American relations. (2) Mexico’s currency fell for the third consecutive session on Thursday, in thin trading volumes amid the U.S. Thanksgiving holiday. The Mexican peso slipped 0.5% to close at its lowest level since Nov. 11, while the real was nearly flat. Both currencies had weakened sharply the previous day after stronger-than-expected U.S. economic figures supported expectations of a December U.S. rate increase. Latin American markets were hit hard after Donald Trump’s unexpected victory at the U.S. presidential elections, but have since stabilized as traders seek clarity on his policies. Overall, Latin American stock markets were mostly down, with. Brazil’s benchmark Bovespa stock index falling 0.95%. (3)

Monday 11/21

• The S&P 500 climbed to all-time highs on Monday, notching its first record close since August. The index is now up nearly 3% since Donald Trump’s election. The Dow also hit a new high, taking it closer to the 19,000 level. (1)

Tuesday 11/12

• U.S. stocks closed higher Tuesday as the Dow industrials and S&P 500 cleared psychological milestones but major indexes simultaneously reached record highs for a second straight day. (4)

Wednesday 11/23

• Gold slumped on Wednesday after the durable goods report showed that US business spending continued to rebound last month. (8)
• Orders for things built to last such as appliances rose 4.8%, the Census Bureau said, while business capital goods orders increased by 0.4%, more than forecast. (8)

Thursday 11/24

•  U.S. MARKETS CLOSED FOR THANKSGIVING

Friday 11/25

• Stocks closed higher Friday as the market continues a record-setting run with all the major indexes hitting new all-time highs. (9)

Market Close

The Dow Jones industrial average rose 68.96 points, or 0.4%, to close at a record high of 19,152.14. The Standard & Poor’s 500 index gained 8.63, or 0.4%, to an all-time high of 2213.35. The Nasdaq rose 0.3%. to a record 5398.92 and the Russell 2000 gained 0.4% to 1347.20. Trading was relatively quiet as investors returned from the Thanksgiving holiday in the U.S. and as markets closed at 1 p.m. Friday in a holiday-shortened session. Safe-play stocks like utilities and phone companies were among the biggest winners in the early going. Banks fell. The Dow and S&P 500 have risen sharply since the presidential election in anticipation that plans by President-elect Donald Trump to slash taxes, reduce regulations and spend on infrastructure will speed economic growth and corporate profits will rise. Those two major indexes have hit new all-time highs in recent days. (9)

Contributor: Matthew Scheivert

Sources:  (1), CNN  (2), The Wall Street Journal (3), Reuters (4), Morningstar (5), The Guardian (6), Bloomberg (7), Wells Fargo Securities Economic Group (8) Business Insider (9), USA Today