TRUMP GETS IMPEACHED, NAFTA 2.0 PASSES, THE HOUSING MARKET STAYS STRONG AND THE MARKETS HIT MORE RECORD HIGHS

• Twas the week before Christmas and U.S. markets are finishing high, driven by low unemployment, strong housing and real progress with NAFTA 2.0, China and Brexit
• Despite an impeachment vote in the House of Representatives, the S&P 500 reached another threshold, passing 3200 with a gain of 1.7% on the week
• Stunningly, the S&P 500 has seen 31 all–time highs so far in 2019 and there are still five full trading days left in the year
• The tech-laden NASDAQ led the major indices with a gain of 2.2%, followed closely by the smaller-cap Russell 2000\’s jump of 2.1% and the DJIA\’s gain of 1.1%
• Investors received some good economic data this week, including ratification of the USMCA deal (NAFTA 2.0), good news from the housing market and news that personal income improved
• Most of the news, however, was about the historic impeachment vote from the House, which really didn\’t impact the markets at all
• Every single one of the 11 S&P 500 sectors finished the week bathed in green, with the Utilities and Real Estate sectors jumping 2.7% each and the Industrials sector underperforming with a 0.3% gain, held back by a bad week for Boeing and FedEx
• The 2–year Treasury yield increased modestly to 1.63% and the 10–year yield increased a bit more to 1.92%
• The U.S. Dollar Index rose 0.6%
• WTI crude increased $60.38/barrel

Weekly Market Performance

Lots of Positive Data and One Big Fat Impeachment

Heading into next week\’s shortened Christmas trading week, investors digested a lot of positive economic news that was glossed over by the mainstream media, as an impeachment vote can probably sell more newspapers. So, in case you missed it, here were the positives:

Housing is Up

On Tuesday, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced the following new residential construction statistics for November 2019:

• Building Permits are up as privately–owned housing units authorized by building permits in November were up 1.4% and single–family authorizations in November were up 0.8%
• Housing Starts are up as privately–owned housing starts in November were up 3.2% and singlefamily housing starts in November were up 2.4%
• Housing Completions are up as privately–owned housing completions in November were up 6.6% and single–family housing completions in November were up 3.6%

But wait, there\’s more. According to data from the National Association of Home Builders, U.S. homebuilder confidence reached its highest level since June 1999. The latest reading of the Home Builder Confidence Index stood at 76 basis points in December and anything above 50 is considered positive.

Industrial Production Rebounded

Also on Tuesday, the Federal Reserve released data on industrial production and manufacturing with this statement:

“Industrial production and manufacturing production both rebounded 1.1 percent in November after declining in October. These sharp November increases were largely due to a bounceback in the output of motor vehicles and parts following the end of a strike at a major manufacturer. Excluding motor vehicles and parts, the indexes for total industrial production and for manufacturing moved up 0.5 percent and 0.3 percent, respectively. Mining production edged down 0.2 percent, while the output of utilities increased 2.9 percent.”

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Personal Income Up

On Friday, the U.S. Department of Commerce announced that personal income increased 0.5% in November and disposable personal income increased by the same 0.5%.

This personal income increase in November is on the heels of October\’s 0.1% increase. Further, wages and salaries, the largest component of personal income, increased 0.4% in November after increasing 0.5% in October.

Congress Was Busy

Unless you were living under a rock, you know that the House of Representatives voted mostly along party-lines to impeach President Trump. But the very next day, the House also approved NAFTA 2.0, which is now called the United States Mexico Canada Agreement by a vote of 385 to 41.

Cynics are quick to point out that the House delivered President Trump arguably his worst news and best news within 24 hours of one another, as Trump has been trying to redo NAFTA since he campaigned in 2016.

Sources

federalreserve.gov; bea.gov; census.org; standardandpoors.com; factset.com; nyse.com; msci.com; nasdaq.com; dowjones.com; morningstar.com; edwardjones.com; bloomberg.com