February 3, 2019
Weekly Market Outlook
By Keith Schneider
US Equity markets embraced a newly dovish Fed by tacking on a +1.5% weekly gain. US treasuries decided that it’s inflationary and backed off. Inflation adjusted bonds (TIPS) did well, attacking its 50-week moving average.
Meanwhile, other inflation plays such as gold miners (GDX), Oil (USO) Brazil (EWZ) all out performed key benchmark stock indexes this week.
On another note, Trump’s pressure on NATO members to pay their fair share of expenses is working as NATO is upping its spending by $100 billion over the next two years. However, Trumps pressure has resulted in some serious blowback.
NATO member’s spending won’t be with US defense contractors. Germany has decided not to buy US built fighters, opting for jets produced in Europe, costing US defense contractors billions of dollars.
Recent research shows that global confidence in a political leader directly impacts a countries GDP, as it effects global trade thru cooperation. The data suggests for every 1% increase or decrease in approval abroad of a countries leadership, results in a .75 % increase/decrease in a countries GDP. Currently, outside of the US, Trump’s ratings have dropped significantly ( -18% or more), especially with our allies.
This week’s takeaways are:
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