Monday, November 24, 2014

Week Ahead Magazine: The ECB Pump

Last week was a mostly positive one for equity markets around the globe. The reason for all the optimism was unleashed on Friday when Mario Draghi indicated he was ready and willing to provide QE in an effort to stimulate growth in the euro zone. And not to be outdone, the People's Bank of China announced a reduction in its one year lending rate. These announcements moved equity prices higher on Friday and resulted in strong weekly gains for equities. For example, on the week, France's CAC Index was up 3.4%, Germany's DAX was up 5.2%, the S&P 500 Index was up 1.2% and the Dow was up 1.0%. The laggard continues to be U.S. small cap (Russel 2000 Index) which was down .1% for the week.

For the most part, economic reports in the U.S. were reported on the positive side of expectations. Housing reports were positive and one article link in the magazine notes the housing data provides strong confirmation that a U.S. recession is unlikely in 2015. The blog at the Stock Trader's Almanac notes one bullish indicator is when the S&P 500 Index is up double digits three year's in a row. Specifically, they note,
"As of the close yesterday, S&P 500 was up 11.1% year-to-date. Should these gains grow or at least remain intact through yea-rend, it would be just the fourth time in 84 years of S&P 500 data in which there have been three or more consecutive years of double-digit gains. In all past occurrences the year after the third year of double-digit gains was also up double-digits for an average gain of 23.1%."
This will be a shortened trading week due to the Thanksgiving holiday in the U.S. Important economic reports will be released during the week though.
  • GDP for Q3 (second report), consumer confidence and Richmond Fed Mfg Index (T)
  • Durable Goods Orders, Jobless Claims and Personal Income and Outlays and New Home Sales (W)
  • Chicago PMI (F)
For more insight into the coming week, below is the link to this week's magazine.

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