Welcome to a new year! I trust you had a wonderful holiday season with family and friends and are getting ready for a great 2020. The world index, Wall Street and Europe indexes hit records while Trump impeachment continues, and the economy continues its growth. Let’s get into it.
Econ Comments: U.S. Housing Starts jumped 16.9% last month, the highest level since December 2006. On a year-over-year basis, Housing Starts soared 40.8%. Part of it comes from the Federal Reserve’s interest rate cuts (three times last year), pushing down mortgage rates. Note that housing accounts for approx. 3% of the U.S. economy.
And although China’s domestic demand and the trade war slowed its growth rate to 6% in 2019 – the slowest in 29 years, its economy grew by 6% in Q4 alone.
Index Comments: Key world equity indexes reached new highs on Friday (Jan 17th, 2020). European shares touched a record high, as the STOXX 600 index rose by almost 1%. Emerging market stocks rose 0.37%, mostly due to China’s markets as per above economic comment.
Currency / Bond Comments: Since mid October ’19, Japanese yen, considered a safe-haven currency, weakened as the rally in stocks showed strong risk appetite. The dollar index (DXY) last Friday rose 0.3%, while the euro was down 0.4%.
Benchmark 10-year notes fell in price pushing their yield up to 1.832%. The U.S. Treasury announced that it will begin issuing a new 20-year bond in the coming months as it seeks to deal with budget deficits of $1 trillion annually.
Commodities Comment: Oil prices (WTI) rose higher (0.5%) while Gold (GLD) rose by 0.18%. The CRB also rose slightly.
Technicals: You’ll note from my long term charts at my publishing site (link below) that the following markets are all technically strong, including: EAFE (EFA), World Equities (ACWI), UK Equities (EWU), France Equities (EWQ), German Equities (DAX), Japan Equities (EWJ), Emerging Markets (EEM), India Equities (INDA), the Commodity Index (DBC), and Gold (GLD). Also of note are Palladium shares (PALL), gaining over 55% since my BUY trigger in Sept ’19, and Platinum shares (PPLT) rising over 8% since late December’s trigger. Lastly, U.S. and Canadian REITs (VNQ, ZRE) were recently below resistance but have since breached it and are now back in bullish mode.
You can check out the above-mentioned annotated charts by going to my free publishing site below.
Daily and Weekly charts have been updated: