Market Commentary for Week Ended 02/14/2020

The market continued its relentless March higher this week.  The narrative is that the coronavirus is a short-term negative variable and that it won’t survive the summer.  Meanwhile the United States Federal Reserve is injecting about $50 billion per week into the banking sector as part of their overnight repo operations through 3/12.  They plan to release a new schedule on 3/12 and continue these operations through the summer.  It is an interesting coincidence that the market has risen steadily about 13% since the Fed began these operations in October 2019.  During the announcement they were quick to point out that these operations do not constitute quantitative easing (money printing).  We will see what history decides.

Weekly Economic Data of Note

1. 02/13/2020 Consumer Price Index:  The ongoing conundrum is the continuing low inflation pervasive in the global economy.  As such, interest rates have remained historically low and the Federal Reserve has remained dovish. 

The Consumer Price index is a measure of price changes for a fixed basket of goods.  The figure can in just below expectations for the month to month change between January and February at +0.1% versus an expected change of +0.2%.  The annual rate of change 2.05% was ahead of expectations.

In summary inflation continues to be near the Feds stated target rate of 2% despite their historically accommodative stance. 

2. 02/14/2020 Retail Sales:  I feel like a broken record, but I will say it again, “The US consumer remains very strong.”  Retail sales numbers for the month of January came in as expected with at a 0.3% month over month changed.  Sales are growing!

3. 02/14/2020 Industrial Production:  Again, while the consumer is strong, the industrial sector has waned.  As expected, there was a -0.3% decreased in the industrial production figures for the month of January vs. December.

4. 02/14/2020 Consumer Sentiment Survey:  The University of Michigan administers a monthly survey of 600 households to get a barometer of their financial conditions and how they feel about the future.  This month reading came in at 100.9 which was a surprise to the upside as the consensus was for 99.7.  It isn’t a very scientific survey as it is hard to measure feelings, but it is yet again another sign of the healthy US Consumer.  Things are going well.