Transcript PDF - 1919 Investment Counsel

Weekly Market Insights
Dow Jones: 19827 YTD +0.43% │
S&P 500: 2271 YTD +1.54% │
NASDAQ: 5555 YTD +3.22%
January 23, 2017
Simply amazing!
Friday Donald Trump was inaugurated as President of the United States. That alone makes it a historic and exciting week. It was simply amazing both during the
inauguration and the week-end following it. The equity markets were calm with the Dow down .29%, the S&P down .15% and the NASDAQ down .34%. It
appears as if the Trump rally has taken a breather. Last week we wrote about uncertainty and uncertainty seems to reign not just in the U.S. but globally. The
economic releases are certainly encouraging: Ms. Yellen, the Fed Chair, remains satisfied with U.S. economic growth which means she remains in the camp of
higher interest rates, particularly since the last measure of inflation broke the 2% level which the Fed has made the acceptable upper level. As readers may
recall, Ms. Yellen spoke of possibly three more 25bp’s, (.0025) raises in the Fed Funds rate. Although higher rates do slow the economy, investors should
remember that the Fed is doing this because they believe there is significant strength in the economy.
Back to the inauguration. Most expected and hoped for a reassuring message from the new President bringing both sides together. As has already been written
by many, many others, this was not the case. The speech started out quite graciously but then dramatically changed. Mr. Trump lashed out at official
Washington, both sides of the isle, as the culprits, blaming them for the demise of the United States. He characterized them as self-serving and misdirected. He
drew a picture of the United States as having fallen into terrible shape. Hyperbole is not unknown in political speeches but I think this gives an incorrect picture
of where the United States stands among the world’s powers. The U.S. has, by far, the largest GDP and the largest GDP per capita of any of the large countries.
A good barometer of how high a country’s economic position is held by the world is Inward Foreign Direct Investment, (IFDI). This is a measure of how much
foreigners invest in a country. Again the U.S. leads the world. Militarily it is undisputed that the United States military is the strongest in the world.
The President’s press secretary held a conference which was disturbing at worst, confusing at best. While on Meet the Press, Kellyanne Conway, Sr. Advisor to
the President spoke of Alternative Facts.
It was a remarkable weekend, not one to dissipate uncertainty. Investors will have to wait a bit longer to get a confident grasp of where the new Administration
is going.
- Michael Olin Clark
[email protected]
The Week Ahead:
MONDAY: Canada Wholesale trade sales (m/m) expected at 0.60%, Russia Industrial production (y/y) expected at 1.70%
TUESDAY: US Existing home sales (m/m) expected at -2.00%, Japan Exports (y/y) expected at 1.20%, Japan Imports (y/y) expected at -0.80%
WEDNESDAY: Italy Industrial orders (m/m) expected at 1.00%, Russia Unemployment rate expected at 5.50%
THURSDAY: US Wholesale inventories (m/m) expected at 0.10%, US New home sales (m/m) expected at -1.20%, US Leading index expected at 0.50%
FRIDAY: US GDP annualized (q/q) for 4Q expected at 2.20%, US Personal consumption expected at 2.50%, US Durable goods orders expected at 2.60%
The views expressed are subject to change. Any data cited have been obtained from sources believed to be reliable. The accuracy and completeness of data cannot be guaranteed. Past performance is no guarantee of future results.