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Business News Archives for 2018-12


Wednesday marked the biggest post-Christmas rally for U.S. stocks ever amid strong retail sales indications, surging oil prices and positive headlines from the White House. The DJIA jumped 1,086.25 points, or 4.98%, posting its largest single-day point gain in its history, while the S&P 500 and Nasdaq recorded their best days since March 2009. Santa's trip to Wall Street is not coming easy, however, with futures pointing to a significant decline for the three major U.S. stock indexes ahead of the open. (SA)

 

The U.S. Department of Commerce will not publish economic data - including GDP, inflation and other figures - during the ongoing partial government shutdown, an agency spokeswoman told the WSJ. The closure is set to enter its sixth day after the President said he was prepared to wait as long as it takes to get $5B in border wall funding. (WSJ)

If you thought the US was protectionist – look abroad for context.  India will ban e-commerce companies from selling products in which they have an equity interest, which could impact Amazon and Walmart's Flipkart. The companies also can't form exclusive deals with sellers, but they can make bulk purchases through their wholesalers or retail groups and then sell those products with agreements. (SA)

 

A U.S. trade team will travel to Beijing the week of Jan. 7 to hold talks with Chinese officials, according to Bloomberg. Since President Trump and Xi Jinping came to a temporary truce almost a month ago, China has slashed import tariffs and drafted a law to prevent forced technology transfers. Trade tensions have weighed on the world's second-largest economy, with the latest data showing industrial profits suffering their first drop in three years. (Bloomberg)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.



Traders returning from the holiday are sending U.S. futures higher following the Grinch's appearance on Christmas Eve that continued the market meltdown. President Trump has since praised U.S. companies, saying, "they have record kinds of numbers. So I think it's a tremendous opportunity to buy," and expressed confidence in Treasury Secretary Steven Mnuchin, who convened the "Plunge Protection Team" on Monday after speaking with executives from six major banks. (SA)

 

U.S. government payments to farmers - as part of trade aid relief - will temporarily stop next week if the federal shutdown continues, according to the Department of Agriculture. The payments are part of a larger $12B emergency aid package the Trump administration announced in July to help U.S. soybean, corn and commodity producers impacted by retaliatory trade tariffs from China and others. (SA)

 

Shoppers delivered the strongest holiday sales increase for U.S. retailers in six years, according to early data.  Total U.S. retail sales, excluding automobiles, rose 5.1% between Nov. 1 and Dec. 24 from a year earlier, according to Mastercard, which tracks both online and in-store spending with all forms of payment. Overall, U.S. consumers spent over $850 billion this holiday season. The figures suggest a stock-market swoon and partial government shutdown haven’t curbed consumer confidence and spending. (WSJ)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.
 



Non-recessionary bears are rare and not much worse than this. Over the past 40 years, the S&P 500 has experienced only one decline >20% that was not accompanied by a recession based on closing prices and that was 1987. It did come very close three times, falling 19% peak-to-trough in 1978, 1998, and 2011. No one can predict with certainty how far this latest selloff will go but fundamentals, including a low probability of recession in 2019, and historical perspective suggest much of this selloff may be behind us. (LPL)

 

The National Association of Realtors said existing home sales increased 1.9 percent Sales have now increased for two straight months. Existing home sales, which make up about 90 percent of U.S. home sales, fell 7.0 percent from a year ago in November, the largest annual drop since May 2011.

 

According to HireSanta LLC, a company that places hundreds of Saint Nicks throughout the U.S., most Santas typically rake in around $2,000 to $15,000 per holiday season, starting around Thanksgiving and ending on Christmas Day. (FBN)

 

S&P 500 is up 9 and the NASDAQ is up 33.

Oil is down 62 cents at $45.29 a barrel.

Gold is down $5 at $1263 a Troy ounce.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



 

According to Bank of America Merrill Lynch's December survey, pessimism among investors is at its highest level in a decade, with November seeing the largest one-month rotation into bonds since 2001. At the same time, the Financial Times is reporting that no company has borrowed funds in the $1.2T U.S. high-yield corporate bond market this month. Should the trend continue, it would mark the first month since November 2008 that not a single high-yield bond priced in the market. 

 

According to the Mortgage Bankers Association mortgage application volume fell 5.8 percent last week and is 17 percent lower than a year ago. Purchase volume fell 7 percent for the week and is 2 percent higher year over year. Applications to refinance a home loan fell 2 percent for the week and 33 percent from last year. 

Costco reported a quarterly profit of $1.61 per share. Sales beat forecasts. Costco's same-store sales were 8.8 percent higher during the quarter.  (CNBC)

 

Will Santa come? December is off to a very rocky start, as after 10 trading days it was the worst start for the month of December for the S&P 500 since 1980. The good news is in 1980 the S&P 500 bounced more than 6% the remainder of the month. (LPL)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



Columbia Sportswear has hired Peter Ruppe, to lead it’s footwear initiative. Columbia owns two footwear brands -- Montrail and Sorel -- in addition to its namesake label. Ruppe, is a Reedsport, Oregon native. (Oregonian)

 

28 percent of Americans said the economy will get better in the next year, while 33 percent predict it will get worse according to a NBC/Wall Street Journal poll.  The number of Americans expecting the U.S. economy to get worse in the next year is at its highest point since 2013.

 

Forbes reported banks and credit unions have been making Small Business Administration loans at record volumes. SBA loans come with government guarantees against default that mitigates lender risk. 

 

According to the Farm Credit Administration’s “quarterly report on economic issues affecting agriculture,” the “USDA forecasts an 8 percent drop in net cash farm income in 2018.” 

 

A tweet from The UPS Store went viral after the company's joke about shredding kids' letters to Santa this holiday season didn't quite land. In a tweet that has since been deleted, the company said Sunday, "If your child addresses a letter to the North Pole, you can leave it with us. We do shredding." (CNBC)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



A slew of data is due out in the U.S., though the highlight of the week will be the Federal Reserve's monetary policy meeting on today and Wednesday. A rate hike is expected, so market participants will be looking for any indication of the future path of the policy rate for 2019. (LPL)

 

After Monday's decline, the Russell 2000 benchmark is now down 20 percent from its all-time high hit in late August. Small caps had outperformed their large peers earlier in the year. 

According to the National Association of Home Builders Housing Market Index, homebuilder sentiment declined in December to 56, the lowest point since May 2015.

The index has plummeted nearly 20 points over the past year while potential buyers hesitate to purchase new homes even as mortgage rates have pulled back in recent weeks. (CNBC)

 

Nothing says Christmas like Kentucky Fried Chicken. The fast food chain introduced the 11 Herbs & Spices Firelog from Enviro-Log. The yule log is guaranteed to make your home smell like fried chicken. The yule log can burn up to three hours and sells for $18.99. (Yahoo)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



Industrial production growth in China slowed to 5.4% year over year in November, while retail sales grew 8.1%, 
the lowest reading since May 2003. In Europe, services and manufacturing PMIs out of France, Spain, and the Eurozone composite all disappointed. (LPL)

 

U.S. retail sales strong. U.S. retail sales figures for November rose 0.2% on top of the upwardly revised 1.1% increase seen in October, topping forecasts and pointing to a healthy U.S. consumer. The better-than-expected gains may help to alleviate concerns about a slowing U.S. economy given consumer spending accounts for ~2/3 of GDP. 

 

Worry is increasing and that could be a good thing. There are signs that sentiment is near a washout. For instance, the recent American Association of Individual Investors sentiment poll had the most bears since April 2013. Flows saw extreme panic last week as well, as according to Lipper data, weekly outflows of US-based stock funds was an all-time record last week ($46 billion). From a contrarian point of view, this could be a positive for a meaningful low to occur.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



Just 11 days till Christmas and here is some disturbing news. Between 75 and 80 percent of Americans who have a Christmas tree now have an artificial one, and the $1 billion market for fake trees is growing at about 4 percent a year. Americans buy about 10 million artificial trees each year. (Oregonian)

 

Trade tensions cooling. China has resumed soybean purchases for the first time since tariffs were put in place, and more corn shipments could be next according to a Bloomberg. China also indicated it would provide greater market access to foreign companies. (LPL)

 

Initial jobless claims fall. Weekly initial unemployment claims came in at 206K, below the 226K expected and last week's revised 233K. The four-week moving avg., a better gauge of labor market trends, also declined. Overall, the data suggest the labor market, and by extension the U.S. economy, remain in good shape. (LPL)

 

Tailored Brands, the parent of apparel chains Jos. A. Bank and Men's Wearhouse reported a quarterly profit of $1.01 per share, seven cents above estimates. However they saw sales miss estimates, and it lowered its full year guidance. (CNBC)

 

S&P 500 is down 28 and the NASDAQ is down 91.

Oil is down 32 cents at $52.26 a barrel.

Gold is down $6 at $1242f a Troy ounce.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Oil has a supply problem. Sharply lower oil prices are also being cited by some as a sign of looming recession. But oil's weakness has been driven mostly by supply issues, including Iran sanctions, record levels of U.S. production, and elevated domestic inventories. (LPL)

 

The Labor Department said U.S. consumer prices were unchanged in November, held back by a drop in the price of gasoline. Underlying inflation pressure is seen in rising rents and healthcare costs. In the 12 months through November, the CPI rose 2.2 percent. 

 

PYMNTS reported that for the first time in PayPal’s history, “mobile payment volume topped $1 billion, and did so on both Black Friday and Cyber Monday.” Black Friday had the highest total payment volume, posting a 42 percent YoY increase in mobile payment volume. 

 

Is a shutdown coming? President Trump threatened to shut down the U.S. government next week in a discussion with Senate Minority Leaders Chuck Schumer and House Minority Leader Nancy Pelosi Tuesday. So what does it mean for stocks if this happens? The good news is the S&P 500 Index has gained during each of the previous five shutdowns going back 23 years. (LPL)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.
 



My father says don’t confuse activity with accomplishment. Markets did just that yesterday with another 500 point swing that brought us back to the flatline to end the day. 

 

According to NFIB, their Small Business Optimism Index in November registered a 104.8 reading, a modest decline but nonetheless continuing an exceptionally strong two-year trend. Expected Business Conditions and Expected Real Sales accounted for slightly more than half of the decline. 

 

Bonds have done their job. Over the past month while the S&P 500 Index has lost 5% on a total return basis, Treasuries have gained 2% based on the broad Bloomberg Barclays Treasuries Index. Does that mean sell stocks and buy Treasuries? I don't think so. However, this latest performance does underscore the value of moving up in quality with fixed income allocations at this stage of the business cycle. (LPL)

 

Producer Price Index ticked up 0.1% MoM in November but was down sharply from October's 0.6% increase thanks to falling gas prices. (LPL)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



According to Bend business attorney Eager law if you own residential rental property in Oregon and when your tenant moves out he leaves some of their personal property behind, you are in for some unpleasantness. You're required to provide written notice to the tenant, make a determination of value, and sometimes hold a public sale, with the proceeds of which eventually going to the tenant, who by the way left the stuff in your property to begin with. The statute governing all of this is 19 pages long when printed out and it's a mess. 

 

U.S. services sector still humming along. ISM's November non-manufacturing index came in at 60.7. Business activity increased for the 112th consecutive month as order backlogs fell and new orders and inventories rose. Survey participants continued to highlight concerns about tariff impacts and transport capacity shortages, but expressed stable-to-positive views on the overall business environment. (LPL)

 

America turned into a net oil exporter last week for the first time in 75 years. The U.S. sold overseas last week a net 211,000 barrels a day of crude and refined products, according to the U.S. Energy Information Administration.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Wall Street last week sawthe worst week for the Dow, S&P 500, and Nasdaq since late March. The Dow and S&P plunged about 4.5 percent each. The Nasdaq fell nearly 5 percent. The Dow and S&P 500 are negative for the year. However, the Nasdaq was still up nearly 1 percent for 2018. (CNBC)

 

Ten years ago this week Bernard Madoff's $65 billion Ponzi scheme came to light. (CNBC)

 

Uber has filed paperwork for an initial public offering. Rival Lyft filed for its IPO last week. (Reuters) 

 

Bloomberg News reports, “sub-$2 gasoline can now be found in at least one gas station in 20 US states, as the effects of the bear market in crude oil trickle down to motorists.” Meanwhile, “the national average has fallen for seven straight weeks to $2.53 a gallon, the lowest since March.

 

The National Association of Realtors points out that one reason for the flattening housing prices in the West that our region saw the biggest, fastest price increases and consumers are just being priced out of the market. That, along with the impact of increased interest rates. 

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Stocks closed mostly unchanged yesterday after being down 3% intraday after the Federal Reserve suggested they could hold off raising interest rates later this month.
 
According to the Bureau of Labor the US economy added 155,000 jobs in November and the unemployment rate remained unchanged at 3.7%.  The most job gains occurred in health care, manufacturing, and transportation.
 
The Institute for Supply Management said that its non-manufacturing index in November rose to a seasonally adjusted 60.7%, up from 60.3% in October the second-strongest reading in 13 years.
 
The commerce department said that the US trade deficit rose 1.7% to $55.5 Billion which is a 10-year high, amid a record shortfall with China.  Ironically this stems from tariffs imposed by President Trump in an effort to reduce the deficit.




US Stock and Bond markets were closed yesterday in observance of a national day of mourning for the late President George H. W. Bush.  International markets were open though and continued the slide that started here in the US on Tuesday.
 
The Federal Reserve released their "Beige Book" report, which is a snapshot of the US economy.  The report said that the economy appeared to be growing modestly to moderately. Labor markets tightened across a broad range of industries, and wage growth "tended to the higher side of a modest to moderate pace." Tariff-driven price increases have spread more broadly through the U.S. economy, though on balance inflation has risen at a modest pace in most parts of the country. The Fed is widely expected to raise interest rates at the close of its Dec. 18-19 policy meeting. Policymakers have said the United States' strong economy could stoke higher inflation if they do not raise borrowing costs further.

The payroll company ADP released their employment report for the month of November this morning.  The report showed that the US economy added 179,000 jobs last month, which was lower than economists had predicted.
 



Short end of the yield curve inverts. The spread between 3- and 5-year, as well as 2- and 5-year Treasury yields turned negative Monday for the first time since July 2007.

 

Manufacturing activity remains robust. The Institute for Supply Management's manufacturing index for November was 59.3 up 1.6% m/m. New orders were up 4.7%, while the prices component was down 10.9% (showing increasing prices), with aluminum the most cited commodity up in price. Respondents flagged shortages, longer lead times, and tariffs as headwinds, though a healthy business environment and steady orders were positives. 

 

Final US Markit PMI Manufacturing for November (55.3) came in slightly below estimate, though new orders increased at fastest rate since May. Overall, manufacturing activity remains firmly in expansionary territory.

 

Just 20 days till Christmas and the National Christmas Tree Association says natural Christmas trees still outsell artificial, but their share of US annual sales has fallen from 77 per cent in 2010 to 56 percent last year.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



Markets will be closed on Wednesday as we have a national day of mourning for Pres. George Bush.

The Canadian province of Alberta will cut oil production by almost 9%, or 325k barrels/day, to manage a pipeline bottleneck that has doubled the storage levels in the province. The U.S., though, is producing record output, which contributed to oil's ~22% plunge in November, and the influx of supply has put more pressure on OPEC and non-OPEC producers to curtail output in the coming year. (LPL)

 

The US debt-service ratio has declined from a 2007 peak of 13% to a current 9.8%; trends in quality, fixed rate debt, and delinquencies are all favorable. (GS)

 

Microsoft's market value at Friday's close was higher than Apple's, making it the world's most valuable company for the first time since 2002. (CNBC)

 

Amazon is testing cashierless checkout technology in bigger stores. The system tracks what shoppers pick from shelves and charges them automatically when they leave the store. (Wall Street Journal)

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.



WTI crude fell below the psychologically important $50 t level Thursday for the first time in over a year but rebounded on news that Russia is warming to the idea of production cuts after watching prices fall >30% over the last two months. (LPL)

 

Today is the first trading day of December. That could be good news for equity bulls, as since 1950, the S&P 500 Index in the month of December has the highest average return (+1.6%) out of all 12 months. Also, it has never been the worst month of the year - it is the only month that can claim that rare distinction. (LPL)

 

Of all things to have to worry about. In January, Starbucks will introduce a content blocker that bans access to pornographic sites while using its free in-store Wi-Fi. (WP)

 

The Wall Street Journal reported a growing number of small and midsize mortgage firms are cutting staff, going up for sale, or closing down as evidence of the increasing pressure on the housing market amid rising interest rates. The decrease in nonbank mortgage lenders, which experts expect to continue, is contributing to concerns about the economy’s health, especially the slowing housing sector.

 

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.


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