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The Northern Star Newsletter 2/14/19 - Stocks Post Small Weekly Gains

Message from Jon


Travel-

I will be out of the office from Next Thursday the 21st-27th.  Returning on the 28th.  I will then be out on March 4th -6th and returning on the 7th.

Market Update:

As of Feb 12th it appears that good news in coming into the markets by way of a US Lawmakers averting another Government Shutdown by striking a boarder security deal.  IF President Trump signs the deal, this could give the markets a little tailwind. 1

After the Fed decision to maintain rates for the time being, the markets have begun to entertain the questions and concerns for the Trade Talks that have resumed with China and the deadlines of the truce that were put into place last time.2,6 The next gov't shutdown question is also looming in the background but fast approaching to the forefront of conversation.3 President Trump last time agreed to a 3-week opening of the gov't while an agreement on the construction of the Wall and State of the Union address resumed.4

Well, that time is behind us, and now we are having to re-open old wounds and see if a trade deal with both China and Washington as it were can be reached. 

The VIX is below 17 but well above the "no-brainer" risk on level of 10, so even though we will likely see stocks rise and fall, you still need to remain selective and cautious where you step.5

The VIX: 16.25

 

Till we speak again, enjoy your week of cold again!

Jon

 

Sources:

  1. https://www.ft.com/content/1048775a-2e71-11e9-8744-e7016697f225?emailId=5c62b90304552100042fb04e&segmentId=13b7e341-ed02-2b53-e8c0-d9cb59be8b3b
  2. https://www.ft.com/content/b899359a-2da2-11e9-8744-e7016697f225
  3. https://www.nytimes.com/2019/01/25/us/politics/trump-shutdown-deal.html
  4. https://www.cnbc.com/2019/01/24/senate-votes-on-government-shutdown-and-trump-border-wall-bill.html
  5. https://elite.finviz.com/futures_charts.ashx?p=d1&t=VX
  6. https://www.nytimes.com/2018/12/01/world/trump-xi-g20-merkel.html


Stocks Post Small Weekly Gains

WEEKLY UPDATE - FEBRUARY 11, 2019


The Week on Wall StreetMajor U.S. stock benchmarks eked out slight gains last week, with corporate profit reports and news about U.S.-China trade negotiations vying for investor attention over five trading sessions. 

The big three ended the week little changed from where they settled the previous Friday. The Dow Jones Industrials rose 0.17% percent, while the S&P 500 Index gained 0.05% percent. The NASDAQ Composite ended the week up 0.47%. Looking at international stocks, the MSCI EAFE index retreated 0.47%.[1][2]
Earnings Scorecard
As of last Friday, 66% of all S&P 500 companies had reported fourth-quarter earnings. So far, 71% of these firms have announced earnings exceeding estimates, and 62% have seen revenues top projections.[3]

Halfway through earnings season, 2019 future guidance has been a mixed bag for S&P 500 companies.[3] For Wall Street, future earnings can be just as important as current earnings. We keep a close eye on both. 

Tariff Tensions
March 1 is the 90-day deadline set by President Trump for a trade deal with China. If no agreement is reached, the U.S. may consider a new round of tariffs. On Thursday, news that President Trump and Chinese President Xi may not meet before the March 1 deadline added to the market volatility.

The decision by the U.S. on new tariffs may hinge on how much progress has been made toward a new agreement. We don't expect that to become clear until the deadline nears.

State of the Service Sector 
Many indicators help economists take the pulse of the overall economy. The Institute for Supply Management keeps a critical, but not widely followed, index, which helps gauge the health of the service sector.

The January reading on this index came in at 56.7. Any reading above 50 shows that the service industry is seeing solid growth.[4]

Final Thought
Over the next several weeks, we're expecting more volatility as the markets digest economic news, a new wave of corporate earnings, and twists and turns on the geopolitical front. We will be watching to see if anything changes our short-term and long-term view. If you have any questions, don't hesitate to contact us. 


THE WEEK AHEAD: KEY ECONOMIC DATA
Wednesday: January's Consumer Price Index, which measures monthly and yearly inflation.
Thursday: December retail sales figures (a delayed release due to the government shutdown).
Friday: January's preliminary University of Michigan consumer sentiment index, a gauge of consumer confidence levels.


Source: Econoday / MarketWatch Calendar, February 8, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.



THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Loews Corp (L)
Tuesday: Activision Blizzard (ATVI), HubSpot (HUBS), Occidental Petroleum (OXY)
Wednesday: Cisco (CSCO), Hilton Worldwide Holdings (HLT), Yelp (YELP)
Thursday: Applied Materials (AMAT), CBS (CBS), Coca-Cola (KO)
Friday: Deere & Co. (DE), PepsiCo (PEP)

Source: Morningstar.com, February 8, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

 

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