January is over and most are happy to forget the month. It is the worst start of the year since 2008 as the selloff has erased over $7 trillion from market value worldwide. January is also the worst month since 2010. Will February be the inverse?
Yesterday stocks rallied on the strength of earnings and oil. After trading closed however, Amazon disappointed greatly and at the time of this writing shares are down almost 12% or almost a $100. As widely discussed, AMZN is one of those “must own stocks.” Can I write has “another one bites the dust” as Freddie Mercury used to sing?
Can I soon quote Genesis “And then there were three?” First Apple, then Amazon. Who is next? Google?
Today is the preliminary release of fourth quarter GDP. The quarter is expected to grow by 0.8%, a slowdown from the 2.0% measured in the third quarter because of trade and inventories.
I view a decline in inventories as positive given the necessity to restock stores. I can make an argument companies recall the winter induced slowdown of the last three years and are/were determined not to enter the winter quarter fully stocked thus kept stores lean.
Most will focus on core GDP—GDP less inventories, trade, and government spending—to assess the strength of the economy, the indicator the central bank uses to help set monetary policy. Such is expected to increase around 1.9%.
What will happen today?
Last night the foreign markets were up. London was up 1.16%, Paris up 0.72% and Frankfurt up 0.52%. China was up 3.71%, Japan up 2.80% and Hang Sang up 2.54%.
The Dow should open considerably higher following the Bank of Japan’s surprising move to adopt a negative interest rate strategy. The 10-year is up 14/32 to yield 1.94%.
ALL ARE HAPPY TO BID JANUARY GOOD BYE!
Ken Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
