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Weekly Market Update – January 6, 2017

The Dow was up 65 points on Friday after jobs data showed solid but slower job creation and accelerated wage growth. For the week the Dow was up 1%. Year-to-date the Dow is up 1%.

The ISM manufacturing index increased to 54.7 in December from 53.2 in November, ahead of the 53.7 consensus. The headline, new orders, production and employment indexes all reached new highs for 2016. Construction spending increased 0.9% month over month in November to $1.18 trillion. Private nonresidential spending increased 0.9% while private residential construction increased 1%. December auto sales were on pace for a new annualized trend at 18.4M SAAR, above the November 2015 peak rate of 18.1M.

December Federal Reserve Open Market Committee (FOMC) minutes were a key focus this week. The minutes emphasized uncertainties regarding the timing, size and composition of any future fiscal policy initiatives. The minutes also noted potential upside coming from more expansionary fiscal policies and inflation forecasts. Several FOMC members said if the labor market tightens significantly more than expected, a less gradual pace of interest rate hikes could become appropriate. Our preferreds continue to outperform the Barclay’s Aggregate Bond Index, and are off for a good start for 2017.

The price of crude oil was 0.1% lower this week as investors weighed the prospects for lower production. As U.S. production slowly increases, the OPEC countries started to decrease their output to meet the 32.5 million barrels a day ceiling pledged at the Cartel’s Nov. 30 meeting.

Next week’s economic calendar highlights include Consumer Credit (Jan. 9), Wholesale Inventories (Jan. 10), Crude Inventories (Jan. 11), Initial Jobless Claims (Jan. 12), and Producer Price Index (Jan. 13). Corporate earnings releases for Q4 will start next week.

Have a great weekend!

Yansong Pang 

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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