Invincible Markets | January 5, 2018

The markets started 2018 much the same way it spent most of 2017; positive economic data and surging equity prices.

Economic Data

Factory orders increased more than expected, by 1.3% in November. A good indicator leading into the final retail results for December that will be out in the next few weeks. The 4th Quarter is the strength of the U.S. economy and based on factory orders Q4 GDP should not disappoint.

ISM Manufacturing increased to 59.7 in December. 50 marks the line between expansion and contraction, making this a very strong reading. Again, a good indication of Q4 GDP, released later this month.

Unemployment disappointed with adding just under 150K jobs in December. On the bright side wage growth was consistent with prior months and unemployment remained at 4.1% for December. Ā Also, adding 148K jobs is not an economy in peril.

Conclusion

The markets welcomed 2018 with open arms. The S&P 500 rose 2.6% in the first week of trading. The tech heavy NASDAQ rose 3.38%. Not least was the symbolic move of the Dow Jones reaching and closing above 25,000 for the first time on Friday. Tail winds are strong, with a weak dollar, fiscal stimulus, low inflation, rising energy prices and strengthening GDP. Markets seem to feel invincibleā€¦

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