Market Synopsis: Equities up, Treasury Yields mixed, Commodities mixed, Dollar down, Crypto up
Past Week Events:
- On Monday, The U.S. Leading Indicators Index was released which provided valuable insight into the future of the economy. The index is a composite of 10 major economic indicators. The index’s purpose is to forecast future economic activity and help gauge current economic activity. The index fell 1 percent in the month of December and 1.1 percent the month before. This decline in the index for 10 straight months is signaling to investors a potential recession as it shows a widespread weakening outlook for manufacturing, home building, and both job and financial markets.
- On Friday, The PCE(Personal Consumption Expenditures) was released. PCE serves as the Federal Reserves preferred measure of inflation. It is quite similar to the CPI(Consumer Price Index) as it measures the prices of goods and services consumed by households; however, the its method of calculation is different. PCE showed that inflation has slowed from 5.5% to 5% a 15-month low. This illustrated a weakening U.S. economy. This certainly pleased the Federal Reserve.
- The federal funds rate is the rate in which banks charge each other overnight for borrowing capital. The federal funds rate is a major indication of where the economy is headed. The rate has been on an incline for a while because of the government’s attempts to counter inflation, this months will give investors an eye on wether this trend will continue or wether there is a shift.
- The month of January’s unemployment rate is released which reports the amount of Americans who are not currently working. This is a great indication of the strength of the economy.
Market Snapshot:
- Equities had a strong week with all the indices closing higher. PCE and the U.S. Leading Indicators Index boosted investor confidence of cooling inflation. Equity markets did have a slight hiccup mid-week as Microsoft earnings disappointed and caused a broad-based selloff. However, markets quickly recovered and finished the week off strong barring some selling near the close on Friday. Also, interestingly trading had to be halted early Tuesday morning because of a “technical glitch” at the NYSE which caused some stocks to plummet over 10% in a few seconds. Some investors were concerned that some “skullduggery” was afoot, but it was made clear it was a menial manual error. Treasury yields had a choppy and mixed week with the 30 Year treasury going negative on the week while everything on the shorter end moved higher. The dollar moved lower considering cooling inflation. Commodities were mixed as gold had a strong week while oil moved sharply lower.
Quip of the Week: “Why did the stock market crash?
Because it had a bad case of oxidation and all the stocks went rust!”
U.S Equities:
Indexes(Week)
SPX 4,070.56(2.47%), DJIA 33,978.08(1.81%),
NASDAQ 11,621.71(4.32%), RUT 1,911.46(2.36%)
Sectors
- All the sectors were in the green this week except for Healthcare which closed down under a percent. Consumer Discretionary was by far the top performer closing the week up an astonishing 6.65%. Only communication and Tech came close each up 4.01% and 3.65% respectively.
Treasuries:
- Treasury Yields had a very choppy week. The final result was mixed with the shorter end closing the week higher while the 30 Year was the lone one to close the week lower. Yields fell into the middle of the week until having a nice recovery at the end of the week, especially with the many data points pointing to a slowing economy.
Commodities:
- Oil
- Unlike Gold, Oil fell on the week. It closed the week under 80$ a barrel. There are a number of factors investors are watching. The most critical element which will play a massive role in price movement is the re-opening of China.
- Gold
- Gold finished yet another week in the green with slight gains still putting it over 1,900$ an ounce. An interesing tidbit: Based on the current market price of an ounce of gold $1,927.29, using Avogrado’s number it can be concluded an atom of gold costs 0.000000000000103 dollars(Leave a comment if you get a different answer).
BTC -23,065, 3.26% ETH - 1,592.80, -2.75%
- Cryptocurrency markets were varied with Bitcoin outperforming. Interestingly, Ethereum has underperformed Bitcoin on the week. Now that Bitcoin is practically treated as any other risk asset all eyes are set on the FOMC meeting next week.
Europe:
Stoxx 600- 455.17, 0.67% DAX -15,150, 0.77% FTSE 100 -7,765, -0.07%
Chart of the DAX (5-day)
I In efforts to counter Russia’s invasion of Ukraine, European commissioners have been looking to set price caps on Russian oil. They want to slow down Russia without affecting the global economy negatively. No official agreement has been reached, but there seems to be serious chances this become reality.
Asia:
XJO (Australia)-7,493, 0.79% Shanghai 180 Index-8,805, 2.16% Nikkei 225- 27,382, 3.12%
XJO 5-day Chart
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