In a shortened four day trading week, all major U.S. equity indices put up new record highs for a second consecutive week. Interest rates fell across the yield curve, signaling doubt on the willingness of the Fed to hike interest rates at the upcoming March meeting. Last week was pretty quiet on the economic front with just 10 releases while next week brings 27 releases, including the much anticipated ISM manufacturing and services sector surveys.

Your Weekly Anecdotes:

  • Bespoke noted that Friday’s 11th consecutive up day by the DJIA is a rare occurrence, only happening eight times previously and now the longest daily ‘up’ streak since 1987. Even more interesting, the index was positive in every three month period following such streaks – by an average of 7%.
  • Fourth quarter earnings season came to a close last week. 63% of companies beat earnings estimates and 57% beat revenue estimates. Of note was that the revenue beat rate was the highest in two years.
  • Small cap stocks pulled back from last week’s record high with three of four days in the red.
  • For the S&P 500, the current bull market ranks as the second longest (behind ‘89-’00) and third strongest (behind ‘89-’00 & ‘49-’56) on record.
  • The Fed released minutes of their January meeting. Two primary takeaways were the presence of very mixed perceptions about the direction of the economy and that the Fed will begin releasing ‘fan charts’ which illustrate the uncertainty of estimates in economic projections.
  • While stocks have soared this year, interest rates seem to be telling a different story. The 10yr U.S. Treasury rate fell more last week than any week since July of 2016, now at its lowest mark since late November, at 2.317%.
  • Odds of a Fed rate hike in March have fallen over the past couple of weeks, now sitting at 40%.
  • Since their lows in December 2016, emerging markets have rallied over 13%.

Your Weekly Economic Updates:

  • January existing home sales jumped 3.8% year over year, beating expectations and rising to their highest mark since the downturn.
  • The housing market is dealing with extremely tight supply of existing homes – currently 1.69mm units, which is the second lowest on record (behind last month), since 1999. Tight supply of existing homes should work to support prices of existing home stock looking forward.
  • Conversely, new home sales have lost steam since latter 2016 and missed consensus estimates in January.
  • Markit manufacturing flash PMI for February are showing slowdowns in the U.S. and Europe but acceleration in Japan.
  • Weekly jobless claims came in as expected at 244,000. The current 4-week average of 241,000 is the lowest reported 4-week average since July 1973.
  • University of Michigan’s consumer sentiment measure remained strong in January at 96.3.
  • Bespoke noted that much of the economic strength since the election has been soft indicators and surveys about the future – somewhat confirmed by University of Michigan’s consumer sentiment survey last week which showed people are more positive about their present situation than they are about the future.