Vista Partners’ Friday Weekly Market Wrap For January 3, 2020

The broad markets sold off on Friday seemingly in part reacting to the news that US’s airstrike had killed Iran’s top military commander. In turn threats from Iran surfaced and fear was now in the markets as escalation is believed to be in the cards. The “fear gauge” Vix (TVIX) ended at $51.88/share up +9.61% today but down from $52.17/share last Friday’s close. It did not help the markets that the ISM Manufacturing Index for December was reported at a 47.2% reading, again below the Mendoza line for the 5th straight time.

As a result, the S&P 500 ended the day at 3,234.85, representing a -.2% weekly decline leaving it up .1% YTD. The Dow Jones Industrial Average ended at 28,634.88 representing a -.0.0% weekly decline leaving it up +.3% YTD. The Nasdaq Composite closed at 9020.77 on Friday, realizing a weekly +.2% advance leaving it up .1% YTD. The Russell 2000 moved lower by -.46% at the close of trading Friday at 1660.87 representing a weekly -.5% decline leaving it down -.4% YTD.

Economic Reports

On Monday, the total durable goods report confirmed a drop by -2% in November below the 1.5% expected rate. However, new home sales in November surprisingly rose +1.3% month/month to a seasonally adjusted annual rate of 719k units while on a year/year basis new home sales are now up +16.9%. The median new-home price jumped +7.2% to $330,800 in November.

On Tuesday the Conference Board’s Consumer Confidence Index report showed a drop to 126.5 in December. The FHFA Housing Price Index Report for October rose by +.2%. The S&P Case-Shiller Housing Price Index for October rose by +2.2%.

On Wednesday, nothing was  reported on New Years Day.

On Thursday, the initial claims for the week ending December 28, 2019, were confirmed to have gone down by 2k to 222k as the continuing claims for the week ending December 21, 2019, rose by 5k to 1.728M.

On Friday, the ISM Manufacturing Index for December was reported at a 47.2% reading.  The total construction spending rose +.6% month/month in November while residential spending moved up by +1.8% month/month (led by new single-family construction up +1.2% and nonresidential spending decreased -.3% month/month.

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

“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

Tomorrow

We will not receive any significant economic data on Monday.