“Strong Week But Weak Friday In The Markets” Vista Partners’ Friday Weekly Market Wrap For Feb.7, 2020

The broad markets overall rose this week (the biggest move in approx. 6-months) with a number of economic reports showing strong or steady moves including Friday’s Nonfarm payrolls report for January which moved higher by 225,000, the wholesale inventories report dropped by -.2% in December, & Consumer credit jumped by $22B in November. We also got the news this week that China will cut tariffs on $75B of U.S. goods as part of the Phase One Trade Deal by Feb 14th. However, Friday’s weak session saw indices drop across the board as the coronavirus worries & global growth concerns crept their way back into investors’ heads to end the week.

With the overall improved outlook this week leading up to Friday, US treasury prices lowered while yields rose as the inverse relationship dictates. The 2-yr yield moved up by 7 basis points ending at 1.39% while the 10-yr yield also moved up by 6 basis points to end at 1.58%. The U.S. Dollar Index strengthened by +1.3% to end at 98.69. Oil prices declined again this week ending down by -2.2% (down -17.4% YTD) closing at $50.42/bbl down from last week’s close of $51.64/bbl.

The Dow ended the week back over the 29k level again at 29,102.51, +3% week over week.

The S&P 500 ended the week at 3,227.71, representing a 3.2% weekly gain and now up 3% YTD. The information technology, +4.5%, materials, +4.5% led the pack of ten sectors that finished in the green this week but utilities, -.6%, sectors finished in the red.

The Nasdaq Composite closed at 9,520.51 on Friday, representing a weekly +4% jump and is up +6.1% YTD.

The Russell 2000 moved higher closing at 1656.78 representing a weekly +2.6% gain and is now down -.7% YTD.

The “fear gauge” Vix (TVIX) ended at $43.65/share up +2.71% today & down from $56.58/share last Friday’s close.

The FAANG stocks closed as follows on Friday and had an overall postive week of gains:

• Facebook (FB) $212.33/share, +.7% ($201.91/share a week ago)
• Amazon (AMZN) $2,079.28/share, +1.42% ($2,008.72/share a week ago)
• Apple, Inc. (AAPL) closed at $320.03/share, -1.59% ($309.51/share a week ago)
• Netflix (NFLX) $366.77/share, -.05%, ($345.09/share a week ago)
• Alphabet (GOOG) $1479.23/share, +.20%, ($1434.23/share a week ago)

Economic Reports

On Monday we received the ISM Manufacturing Index report for January which moved up to 50.9% & back into the expansion mode level. However total construction spending went down by -.2% month/month in December while residential spending moved higher bu +1.4% month/month & nonresidential spending lowered by -1.2% month/month.

On Tuesday, we received The Factory Orders Report which confirmed a rise of +1.8% month/month in December.

On Wednesday the ISM Non-Manufacturing Index Report for January clocked in a 55.5% reading in December. The Trade Balance report for December confirmed growth in the deficit to $48.9B. The ADP Employment Change report confirmed an estimated 291k jobs were created to private-sector payrolls in January. The weekly MBA Mortgage Applications Index rose 5%.

On Thursday, the Initial claims report for the week ending February 1 dropped by 15k to 202k while continuing claims for the week ending January 25 moved higher by 48k to 1.751Mn. The BLS reported that nonfarm business sector labor productivity rose by +1.4% in Q4 while unit labor costs rose +1.4%/

On Friday, we received the Nonfarm payrolls report for January which by 225,000. The wholesale inventories report dropped by -.2% in December. Consumer credit jumped by $22B in November.

Investing & Inspiration

“In investing, what is comfortable is rarely profitable.” -Robert Arnott

“The fundamental law of investing is the uncertainty of the future.” -Peter Bernstein

“How many millionaires do you know who have become wealthy by investing in savings accounts?” -Robert G Allen

“Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself.”-Ivan Boesky

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“I talk about macro themes a lot because they are fun to talk about, but it is the risk management that is the most important thing. The risk control is all bottom-up. I structured the business right from the get-go so that we would have lots of diversification.” -Michael Platt

“Blaming speculators as a response to financial crisis goes back at least to the Greeks. It’s almost always the wrong response.” -Larry Summers

Tomorrow

We are due to receive the following significant economic data next week:

• The inflation data report on Thursday,
• The retails sales report on Thursday,
• The Consumer sentiment report on Friday &
• 13% of the S&P 500 companies will report earnings results