Getting *Stuff Done!

Getting *stuff done!  Stocks climbed to new highs again on Friday as lawmakers demonstrated that they can agree on at least some things. Year end cheer and no bad news paved the way for stock buying.

 

N O T E W O R T H Y

 

• A tale of two quagmires.  Even if one tries, it is impossible to completely avoid the rancorous drama going on in the US capital.  The spectacle is so pervasive that it is often difficult to filter out which news headlines are relevant to the market and which ones are simply click bait.  One thing is for sure, when it comes to politics, the US is divided.  Divided politics and all of its shenanigans is generally not market moving until it prevents important legislation from passing.  The good news out of Washington is that last week, in the midst of a historic impeachment, lawmakers passed some important legislation.  I wrote about the SECURE Act, which was part of an overall budget agreement passed by both chambers.  The approval of the budget will avoid a government shutdown, which is a good thing.  Remember last year when budget talks collapsed over border wall funding?  Anyway, lawmakers managed to pass a budget deal and send it to the White House, where it is expected to be signed.  Also last week, the House of Representatives voted on and approved the USMCA, AKA new-NAFTA, which has been bouncing around the house for some time.  The bill received bipartisan support and has been sent to the Senate. Majority Leader Mitch McConnell has said that the Senate will not take up the bill until after the President’s looming impeachment trial after the new year.  Although the  House approval is positive and reminds us that lawmakers are capable of doing the nation’s business. The divided political environment is not unique to the US.  Much less of a news headline hog is the Brexit saga in the UK.  It was June 23, 2016 when UK voters elected to leave the European Union stunning… just about everyone.  What was remarkable was just how divided peoples’ opinions were.  More shocking was how divided the country has become in the roughly three and half years since the vote.  I cover it sometimes in my daily note, but the daily back-and-forth squabbling between the Conservative and Labor parties is on par with the Republicans and Democrats.  The good news in the UK, if you can call it that, is that the voters have given the government a mandate to “get on with it” and exit the EU by giving the pro-Brexit Tories a strong majority in Parliament.  In one of their first orders of business last week, the Parliament approved Boris Johnson’s Brexit deal setting it up for further debate and votes, all but guaranteeing that Great Britain will, in fact, leave the EU at the end of January.  See, both sides can actually get along… when the political willpower is there.

 

• Look in the rear view mirror.  Why not indulge?  It is, after all, the holiday season.  Sadly, stress and depression actually increase during December and the phenomenon of the Holiday Blues is a real thing.  I don’t want to get into the whys as there has been plenty written on the topic. The most important thing to do is to recognize it in your friends or yourself and seek out support if necessary.  When it comes to stock markets however, it appears that we are all happy-happy-joy-joy.  The S&P500 is up by +28.5% year to date!  Bonds did OK as well, climbing by +8.5% which is a big deal when stocks are up so much.  To make you feel better yet, I want to quickly recall where markets were last year at this time.  Stocks were pretty much in a free-fall throughout the entire month of December and were confounded by the Fed’s raising interest rates at their December 19th meeting, causing a further decay in prices.  It was sizing up to be the worst December for stocks since The Great Depression.  Remember that? Well, thankfully the story line changes as Jerome Powell must have been visited by some specters on Christmas Eve because he hit the tapes on December 26th with a change of heart, stating that the Fed would be “…patient on further rate hikes.”   The rest is history – the S&P rose by +37% since hitting a low close on December 24th marked by Powell’s dovish shift.  If that doesn’t make stock investors joyful, what ever would?

 

THE MARKETS

 

Stocks ended Friday’s session in the black, marking four straight weeks of gains.  The S&P500 climbed by +0.49%, the Dow Jones Industrial Average traded up by +0.28%, the Russell 2000 bounced by +0.29%, and the NASDAQ Composite Index advanced by +0.42%.  Bonds slipped slightly but 10-year treasury yields fell by -1 basis points to 1.91%.

 

NXT UP

 

– Durable Goods Orders are expected to have grown by +1.5% compared to last month’s +0.5% growth.

– New Home Sales are expected to have pulled back by -0.2% month over month compared to last month’s slip of -0.7%.

– Later this week we will get the Richmond Fed Manufacturing Index along with Initial Jobless Claims. See the attached economic release calendar for details.

– This will be a short week.  Stock markets are closed on Wednesday and will close early at 1:00 PM EDT tomorrow.  Regular trading resumes on Thursday, though some European bourses are closed.

 

daily chartbook 2019-12-23

econ numbers 12_23