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Archive for February, 2015

Weekly Market Update – February 27, 2015

The Dow fell 82 points Friday in response to lackluster economic data.  For the week the Dow was flat and for the year it is now up 1.7%.

Q4 US GDP was revised to 2.2% from 2.6% while February manufacturing data showed a contraction in activity, the corresponding index posting its lowest reading since July 2009.  The final February consumer sentiment release beat expectations but came in below January’s reading.  Despite the Friday drop, the Dow was up almost 6% in February, a marked contrast to January’s decline of over 3.5%.  Heading into March, the effectiveness of the European Central Bank’s stimulus program and the Fed’s language on interest rates will be monitored closely.
    
Oil rose 2.8% Friday to close at $49.52, down 2.4% for the week.  Natural gas inched higher.  The yield on the 10-year Treasury fell 1 bps Friday to 2.00%, down 13 bps for the week and now down 17 bps for the year. Through Thursday, February 26, our trust preferred portfolios were up over 3.5%, on average, versus 1.03% for the Barclays Aggregate Bond Index. 

Next week, jobless claims on Thursday and Friday’s February jobs report will highlight the economic calendar.  Expect weekly jobless claims to settle in the 290,000 – 300,000 range (from 313,000 this week) and the jobs report to show the creation of approximately 240,000 jobs in February and a drop in the unemployment rate to 5.6% (from 5.7%).

Weekly Market Update – February 20, 2015

Stocks rallied Friday afternoon after the announcement of a deal between European finance ministers and Greece to extend the country’s bailout.  The Dow gained 155 points to end the week 18,140, an all-time high.  For the week the Dow was up .7% and for the year it is now up 1.4%.

Talks in Brussels Friday yielded an agreement to extend Greece’s bailout by four months, conditional on the country’s commitment to particular budgetary and economic measures which will be submitted and examined on Monday.  The extension helps allay fears of default and a “Grexit”, as the current round of monetary aid to Greece was set to run out at the end of the month.       
 
Oil fell 2.1% Friday to close at $50.72, down 3.5% for the week.  Natural gas moved higher with the continued cold weather.  The yield on the 10-year Treasury rose 2 bps Friday to 2.13%, up 11 bps for the week but still down 4 bps for the year. Through Thursday, February 19, our trust preferred portfolios were up over 3%, on average, versus .55% for the Barclays Aggregate Bond Index. 

All signs from the Fed continue to indicate rates will begin to rise ‘mid-year’, though whether that means July, August or September is still up for debate.  Given the pace of the overall economic recovery, the economic “tightening” should occur at a gradual rate, meaning rates will remain relatively low for a lengthy period of time.  

Next week’s economic calendar highlights include January housing data on Monday and Wednesday, consumer confidence readings on Tuesday and Friday, January inflation data and weekly jobless claims on Thursday and a February manufacturing report on Friday.  Expect the housing data to show a slight decline in activity from December, consumer confidence to fall slightly from previous readings, inflation data to show a decline in prices from December, weekly jobless claims to settle in the 290,000 – 300,000 range (from 283,000 this week) and the manufacturing report to reflect a slight decline in activity from January. 

Weekly Market Update – February 13, 2015

The Dow gained 47 points Friday on the strength of a rally in oil prices and a better-than-expected Eurozone economic growth report.  For the week the Dow was up 1.1% and for the year it is now up the same.

The combined Q4 GDP of the 18 countries that comprised the Eurozone last year was .3% greater than Q3, above expectations of flat growth.  The Eurozone’s largest economy, Germany, led the way with GDP of .7% in Q4 and 1.6% for 2014, above 2013’s growth of just .1%.  The German economy makes up about 30% of the Eurozone’s $13.2 trillion output.  Growth in France slowed while Greece and Italy continued to experience contraction.
 
Oil rose 2.5% Friday to close at $52.47 per barrel on the heels of a report showing another steep drop in oil drilling rigs.  The total number of oil and gas drilling rigs fell by 98 this week, tying the January 2009 number as the largest drop since 1987.  Oil has risen 18% since its low of $44.45 on January 28.  Crude oil production should flatten by summer and start to fall some thereafter.  In portfolios, energy-related preferreds had strong performance.

Next week’s economic calendar highlights include January housing and inflation data on Wednesday and weekly jobless claims on Thursday.  Expect the housing data to show an uptick in activity from December, inflation data to reflect a decline in prices (mostly related to the fall in energy) and jobless claims to settle in the 290,000 – 300,000 range (from 304,000 this week). 

Markets and our office will be closed on Monday, February 16, in observance of Presidents’ Day.

Weekly Market Update – February 6, 2015

Stocks fell Friday despite another favorable monthly jobs report, the Dow finishing the day 61 points lower.  For the week the index was up 3.8% and for the year the Dow is now flat.

The January employment report showed a gain of 257,000 jobs (above estimates of 228,000) capping the largest three-month job gain in 17 years after the number of jobs created in December was upwardly revised to 329,000 from 252,000.  The unemployment rate ticked up to 5.7% from 5.6% due to more Americans entering the workforce.  Interest rates rose on Friday in response to the stronger jobs number.  The positive jobs report keeps the Fed on track to raise rates sometime in the second half of this year.

The new Greek President and finance minister continued their tour of Europe, meeting with finance ministers and European Central Bank officials in an effort to come to an agreement on how the country will handle its debt going forward.  The two sides must agree to terms by the end of this month in order to trigger an additional round of financing.  On Friday, Standard & Poor’s downgraded Greek’s debt rating to B- from B, a move that was expected.     
 
Oil rose over 3% Friday to close at $52.10 per barrel on the heels of a report showing another steep drop in oil drilling rigs.  The total number of drilling rigs is now almost 30% below the peak in October of last year.  For the week, oil gained 9.1%.

Next week’s economic calendar highlights include weekly jobless claims and January retail sales on Thursday and a consumer confidence report on Friday.  Expect weekly jobless claims to settle in the 280,000 – 290,000 range (from 278,000 this week), January retail sales to show a slight decline from December and consumer confidence to rise.

 

Ulland Investment Advisors

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