Vista Partners’ Friday Weekly Market Wrap For Dec. 20, 2019

The broad markets experienced a week of records which culminated in Friday’s session topping again above previous levels. The President Trump impeachment process, the USMCA deal, the US-China trade war movements and a number of economic reports (summarized in the economic report section below) received throughout the week gave the high octane fuel that the markets needed to propel forward once again this week.

As a result on Friday, the S&P 500 ended the day up +.49% at 3221.22, a +1.7% weekly advance and is now up +28.5% YTD. The Dow Jones Industrial Average ended up +.28% at 28,455.09. a +1.1% weekly advance and is up +22% YTD. The Nasdaq Composite gained +.42% ending at 8,924.96, a weekly +2.2% advance and is up and eye-popping +34.5% YTD.  The Dow Jones Industrial Average ended up +.1% and is up +20.6% YTD. The Russell 2000 moved higher by +.29% at the close of trading Friday at 1671.90, a weekly +2.1% advance and is up +24% YTD. The “fear gauge” Vix (TVIX) ended at $50.61/share at the close of trading up +1.5%.

Economic Reports

On Monday we received the NAHB Housing Market Index for December rose to 76 jumping from 69 in November & the Empire State Manufacturing Survey for December also rose to 3.5.

On Tuesday, we received the total housing starts report which showed mover higher by +3.2% month/month to a seasonally adjusted annual rate of 1.365M. Total building permits came in with +1.4% month/month move higher to a seasonally adjusted annual rate of 1.482M. Industrial production also showed a rise of +1.1% in November. The capacity utilization rate also moved higher to 77.3%. The October Job Openings and Labor Turnover Survey confirmed that job openings rose to 7.267M.

On Wednesday, we received the weekly MBA Mortgage Applications Index report that confirmed a move lower of -5% post last week’s +3.8% move.

On Thursday, we received the Existing home sales report which showed a decrease of -1.7% month/month in November to a seasonally adjusted annual rate of 5.35M units due to a relatively small supply & rising prices. Initial claims for the week ending December 7 came in showing an increase of 49k to the 252k level while continuing claims for the week ending November 30 went down by 31k to 1.667M. The Conference Board’s Leading Economic Index (LEI) was flat in November after recent declines.  The Philadelphia Fed Index for December was reported at .3 significantly down from the November reading of 10.4. The current account deficit for Q3 is $124.1B  while the Q2 deficit was revised to $125.2B down from $128.2B.

On Friday, the Personal income report surface confirming a move higher by +.5% month/month in November while personal spending increased by + .4%.  The PCE Price Index moved higher by +.2% in line with expectations while the core PCE Price Index (excludes food and energy) moved up by +.1% The third estimate for Q3 GDP  was on target with real GDP rising +2.1% and the GDP Price Deflator rose +1.8%. The final reading for the University of Michigan Index of Consumer Sentiment came in at 99.3 while the final reading for November was 96.8. Consumers expect a relatively low annual 2.2% inflation rate.

Investing & Inspiration

“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

Tomorrow

The US economic data will be limited during the upcoming holiday-shortened week but highlighted by the following:

• Building permits
• Continuing jobless claims
• Chicago Fed National Activity Index