The S&P 500 was up 2.1% over the week to close at 2,097, an all-time high. The tech heavy NASDAQ closed at 4,893 Friday. That is just 154 points away from its all-time high that was made at the height of the Dotcom bubble in March 2000! Not a bad performance for Friday the 13th.
Bonds sold off with the 10 year Treasury yield up 10 basis points for the week to 2.05%. More central banks are cutting rates with Sweden the latest to offer up QE and negative interest rates on short term deposits.
The International Energy Agency predicted that oil inventories will rise to an all-time high before reduced investment starts to affect production. OPEC stockpiles are on track to hit a record 2.8 billion barrels by midyear. Oil fell on the news, but by weeks end settled in at $53 a barrel, up slightly from a week ago, and well above the late January lows of $44.
Investor’s Business Daily notes Haliburton is planning to cut its workforce. ISI comments that “Energy-related hits to capex and employment are more visible than the energy-related benefits to consumer spending, but they’re not as large.” That sounds right. Lower oil prices will help the U.S. economy.
The House passed a bill previously approved by the Senate, clearing the way for construction of the Keystone XL pipeline, which would carry oil from Alberta to Gulf Coast refineries. President Obama has said he will veto the measure.
I’ll gladly pay you Tuesday for a Gyro today! Channeling their Wimpy (of Popeye fame) the new Greek government wants to reverse the “tough love” imposed on it by creditors a few years ago and renegotiate the terms of its outstanding debt – again. Recall that debt was written down in 2012. But they are back to the well again threatening Grexit if they don’t get their way. Will “extend and pretend” hold sway again? It’s getting old. The odds of Greece leaving the Eurozone are increasing.
Growth in the Eurozone picked up slightly in Q4, with GDP growth coming in at 1.4%. That compares to 2.6% in the U.S. for the same period. Germany is doing great. Italy – not so much.
A cease-fire in Ukraine has been brokered by France and Germany. That comes as the U.S. was considering arming Ukraine (and fighting a proxy war with Russia?).
The rate of unemployment across the 34 nations that are members of the Organization for Economic Cooperation and Development fell to its lowest in six years in December, although the number of people without work remained well above the levels recorded before the onset of the financial crisis in late 2008.
The OECD said the jobless rate for its members—mostly countries with developed economies—fell to 7.1% from 7.2% in November. It was the lowest unemployment rate since January 2009, when the figure also stood at 7.1%.
Inflation in China fell to a five-year low in January, spurring calls from economists for more stimulus measures to counter deflationary pressure in the world’s second-largest economy. China’s CPI rose 0.8% during the year ending in January, down from an already low 1.5% rise YoY in December.
Monday is Presidents Day. The markets and APCM will be closed. Have a nice long weekend everyone. I am heading down to Texas. You will be in Nick’s capable hands next week.
Jeff Pantages, CFA®
Chief Investment Officer