U.S. Stocks posted good gains this week. A strong rally on Thursday was fueled by several factors:
- President Trump stating that he would announce a “phenomenal” proposal for tax reform in the next two to three weeks.
- St. Louis FED president, James Bullard said he thought interest rates would remain relatively low through the end of the year due to a lack of definitive sense whether Trump’s policies would increase growth or inflation.
- Strong corporate earnings and low unemployment numbers.
Also, significant in the news was a three-judge appellate court unanimously refusing to restore the president’s travel ban. In the short period of time it was in effect the ban had hurt business travel. Treasury yields rose as did the dollar while commodity prices were mixed.
In the numbers this week:
- The Commerce Department reported the U.S. trade deficit fell 3.2% in December as exports grew faster than imports. For the year 2016, the trade deficit was $502.25BN, the highest since 2012. The U.S. had a surplus of $247.82BN in services. The trade deficit with China was down from 2015.
- China’s General Administration of Customs reported
- Exports rose by 7.9% in January (versus January 2016) based on improving global demand. This follows a 6.1% decline in December.
- Imports rose 16.7% in January following a 3.1% increase in December.
- Still China’s trade surplus rose in January to $51.35BN.
- The People’s Bank of China reported that its foreign reserves fell $12.31BN last month to $2.998 trillion. China’s foreign reserves have fallen by about $1 trillion since 2014 as China has tried to keep its currency from falling amid cash leaving for foreign investments. The PBOC has raised short term borrowing costs for banks while keeping the benchmark rates steady that effect loan rates.
- The Energy Information Administration’s Weekly Petroleum Data report is attached. wpsrsummary
- The Energy Information Administration reported that U.S. field production of crude oil increased 63,000 barrels in the prior week.
- Baker Hughes reported that oil drilling rigs rose 8 to 591. Gas drilling rigs increased 4 to 149.
- The Labor Department reported that initial claims for unemployment fell 12,000 to a seasonally adjusted 234,000. The four-week moving average of claims, designed to smooth out weekly fluctuations, fell 3,750 to 244,250.
- Factset reported that with 71% of S&P 500 companies reporting, 4th quarter earnings have increased 5.0%.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik Smith
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Indices mentioned are unmanaged and cannot be invested into directly. Past performance is not a guarantee of future results