Last Week Market Gains
After a volatile couple of weeks, the Market closed the week with the S&P 500 up 0.6% the Dow up 0.4% and the Nasdaq up an impressive 1.4%. This gain mostly occurred Friday, after the Federal Reserve didn’t give any overt indications that a change in the planned interest rate hikes will take place this year.
In Economic News
Trade tensions appeared to escalate between the worlds largest two economies as China Threatened to retaliate against any steep trade tariffs that the U.S. decides to impose.
Britain's Brexit Bill of $59 Billion could be withheld from the EU if they (Britain) don’t receive a trade deal. Brexit Secretary David Davis says ‘Article 50 (of the withdrawal agreement) says the withdrawal agreement has to take into account the future relationships. They’re bound up in one, they’re not a separate issue’. Still, the question remains, is this $59 Billion bill going to be worth it to leave the EU? Not to mention the likely worse trade circumstances they will be left in, it seems like this Brexit is certainly going to take a while, if ever, to be worth it’s cost. What do you think?
Last Wednesday, The January FOMC meeting minutes were released causing a sell-off in stocks for the day. The meeting minutes showed that the Fed will likely follow the scheduled four interest rate hikes with potential for more. They cite a stronger than expected economic outlook will make furter rate increases appropriate into the future.
What this means for the U.S. consumer is that their will likely be inflation in the future. In other words, housing rates and general goods will cost more in the future.
The Fed likes to have an interest rate cushion to have in case there is another economic recession. They can then lower interest rates to bolster the economy. As it stands today, they have very few options for economic stimulation either than the controversial Quantitative Easing.
Side Note: The FOMC stands for Federal Open Market Committee and is the branch of the Federal Reserve that determines the direction of Monetary policy
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