Weekly Financial Market Review

A Santa rally materialized for U.S. equity markets in what was the last full week of the calendar year and also the last full week of the decade.  The S&P 500 closed higher for a fifth consecutive week and at a record high, as the picture of trade tensions and global growth continued to look relatively constructive.  Bonds and commodities posted gains as well on renewed optimism for the global economy and expectations of continued monetary policy accommodation as we enter the 20’s. A strong housing sector, generational low unemployment, and robust liquidity are outweighing low global growth and sluggish manufacturing as driving market forces.

Market Anecdotes

  • The holiday shortened week featured thin volumes and a very light economic calendar so there was nothing too substantial to back market action on the week.
  • Technology and consumer discretionary sectors drove markets higher while utilities, healthcare, and consumer staples lagged.
  • Amazon’s positive comments regarding their positive results from the holiday shopping season put a charge into the stock and consumers discretionary names in general.
  • The 37% rally we’ve seen since Christmas Eve 2018 ranks in the 95th percentile historically.
  • The NASDAQ winning streak of 10 record setting days came to a close on Friday, it’s longest such streak since 1997.
  • The ‘FANGMAN’ market cap hit a fresh all-time high of $5.25tn, approximately equal to the combined GDP of France and the U.K.
  • The Financial Times reported that hedge funds have posted their best year since 2013 but still trailed the market.
  • China’s government allowed an unprecedented amount of corporate bond defaults occur in 2019, nearly $18.6bn.
  • China’s imports of Saudi oil surged to record highs toward the end of 2019.
  • The U.S. dollar index fell 0.80% last week, now sitting at its lowest level since July.

Economic Release Highlights

  • The November durable goods report had new orders missing by a good margin (-2.0%a v 1.5%e), disappointing investors after a strong October reading.  Core capital goods orders (capex) of 0.1% was in line with expectations after a big October as well.
  • November new home sales of 719k slightly missed expectations but are at their highest levels in 12 years, a large factor driving 20-year record high homebuilder sentiment indicators.
  • The Chicago Fed National Activity Index jumped 0.56 in November, handily outpacing the -0.33 expectation and the reading followed a -0.76 October mark.