Market Commentary for Week Ended 12/20/2019

At this point it seems as though a continued rally in the S&P 500 this week was a foregone conclusion. The market has strong momentum and due to the strong rally this year investors are unlikely to sell equities before year end and incur a tax liability on their gains.  The S&P 500 finished up well over 1% in a week where the House of Representatives voted to approve the articles of impeachment relating to Donald Trump’s Ukraine dealings.  There was no market volatility surrounding the vote which suggests that no one was surprised by the highly partisan vote. 

Weekly Economic Data of Note

1. 12/17 Housing Starts:  Housing starts came in very strong for the month of November at 1.365M versus a consensus of 1.340M.  Consumers and builders generally start building homes when they are confident about the near-term economic outlook.  This reading indicates continued confidence by the consumer and builders.
2. 12/17 Industrial Production:  1.1% M/M change in November versus an expected change of 0.9%.  This was a nice rebound from the November month decline of -0.8% due to the General Motors strike.  It is nice to see good news in the industrial sector as recent data had been weaker than expected.
3. 12/19 Jobless Claims:  Jobless claims were slightly higher than expected at 234K claims.  There really wasn’t much to note with this data point.  We seem to be in the goldilocks zone in employment where we are near full employment without much inflation.
4. 12/19 Existing Home Sales: The reading came in a 5.35M versus a consensus of 5.45M in the month of November.  The housing sector continues to be a strong pillar of the US economy.  REITS have performed very well this year.
5. 12/20 Gross Domestic Product report:  Gross Domestic Product is a measurement of all the goods and services produced and consumed within the economy.  It is not a measure of happiness, but it is difficult to be happy when GDP is shrinking, and productive jobs are lost.  GDP is one of the most closely watched economic reports and thus usually falls in-line with a highly analyzed consensus.  The 3rd quarter was no exception; GDP grew at a 2.1% annual rate for the quarter.  Consumer spending came in strong at a 3.2% rate of growth Y/Y.