Markets moved sideways last week. After a bad Monday, markets moved up Friday on rumors from the Wall Street Journal that the Fed may (key word) not continue reducing their balance sheet this year. No actual facts or Fed people saying those things, just rumor.
After weeks of hearing we were about to strike a deal with China, guess what? Shocker… we don’t. Commerce Secretary Wilbur Ross came out last week and said the U.S. wasn’t even close to a deal with China. The two sides are a long way apart. Remember, the reason the markets went up the two prior weeks was on rumors of a deal with China. All poppycock. Treasury Secretary Steven Mnuchin, in trying to defuse the Ross comments, came out and said that progress was still being made. Yah, ok.
The point is there are two key things that are moving markets. It’s Not whether the government was shut down or is now open. The markets yawned at that. It’s not been because we’re in corporate earnings season reports (something that Should move the markets). It’s China and the Fed. A real deal with China, and specific details showing that, will send markets higher. If the Fed has changed from it’s hawkish tone and really is going to move policy in a dovish direction, that will send markets higher as well. But this rumor stuff (I have other words for it), it’s all poppycock (yes, other words for that too).
My model’s status: It’s still all down. But speed #1 remains slightly positive. Speeds 2, 3, 4, and 5 remain down.
Durable goods orders results for December have been delayed.
New home sales results for December have been delayed.
Existing home sales results for December were down -6.4%. Year-over-year they were down -10.3%.
The economic focus of the week: It will take place on Tuesday and Wednesday when the Fed has their first FOMC meeting of the year. The Fed will release a meeting statement at 2pm on Wednesday. Fed Chair Jay Powell, in a new move, will hold a press conference after every Fed meeting now. It will start at 2:30pm on Wednesday. There is lots of speculation the Fed may ease up on their reduction of their balance sheet. If the reduction does slow down, markets could go up nicely. If Powell’s press conference disappoints, it could send markets down.
The latest jobs and unemployment data come out Friday morning. Last month the number surprised at 312,000. Expectations are for a number near 180,000. The U3 unemployment rate is expected to remain at 3.9%.
Earnings season is underway. Some of the companies reporting this week: Apple, Amgen, Anthem, AT&T, Boeing, Caterpillar, Chevron, Eaton, Facebook, GE, Harley Davidson, Honda, Lockheed Martin, Mastercard, Merck, Microsoft, Pfizer, PolyOne, Royal Dutch Shell, Sprint, Tesla, UPS, Visa, and Xerox.
Indicator focus: December’s international trade (Tue); ADP’s January employment report, the Fed’s meeting statement, Jay Powell’s press conference (Wed); January’s jobs number and unemployment rate (Fri).
Have a great week.
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