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Weekly Market Update – January 20, 2017

The Dow was up 95 points on Friday as Wall Street assessed the likely direction of policy under the new Trump administration. For the week the Dow was down 0.3%. Year-to-date the Dow is up 0.33%.

The consumer price index (a measure of inflation) rose 0.3% in December, a rate that slightly outpaced November’s 0.2%. Housing and gasoline costs drove the spike. CPI was up 2.1% from the previous December, its fastest rate of increase since July 2014. Industrial production rose 0.8% in December – analysts expected a 0.6% increase – thanks to outperformance in utilities. Initial jobless claims came in at 234,000, better than the 254,000 consensus estimate. This marks their lowest level since November of 1973. December new-housing starts also outperformed, rising 11.3% to a 1.226m seasonally-adjusted rate. Wall Street expected only 1.187m.

Commentary from the Federal Reserve was muted this week. In a speech Wednesday, Fed chairwoman Janet Yellen said that the economy was approaching the Fed’s twin objectives of full employment and price stability. Yellen noted that it takes some time for interest rate hikes to work their way through the economy. If the Fed were to delay rate hikes for too long, she said, it would risk a “nasty surprise.” Our preferreds continue to outperform the Barclay’s Aggregate Bond Index, and continue to do well in the new year.

The price of crude oil was flat on the week, closing Friday at $55.45 a barrel. Oil fell during the first half of the week over concerns about a resurgence in US shale production. Prices then regained ground Thursday and Friday amid a weakening US dollar as well as signs that OPEC nations were serious about implementing production cuts.

Highlights on next week’s economic calendar include initial jobless claims (Jan. 26), existing home sales (Jan. 24), new home sales (Jan. 26), quarterly GDP numbers (Jan. 27), and durable goods orders (Jan. 27).  Fourth quarter corporate earnings releases will continue.

Have a great weekend.

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Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464