World stock markets were traded this week with no major changes. The leading US indices traded with stability, the European average index decreased by 0.9%, the emerging markets rose by 0.3%.
Government bond markets traded with moderate increases, bond yields of 10-year US government declined, A similar trend was seen in the UK and Germany.
Economic data released this week in the United States were generally very good. Extra employs 227 thousand versus expectations of 175 thousand people. The PMI services are excellent and a sharp increase in orders for factories.
Reporting season continues to be positive for the companies in the S&P500, 75% of them reported so far beat earnings forecasts and a half beat sales forecast. The banking gets a boost from President Trump wishing to cancel a significant part of the law Dodd-Frank had imposed stricter regulation US banks after the 2008 crisis. US employment report published was good.
Some estimates are that the Fed will wait with further increase of interest by June, with brightening Trump policy. However, because the data is good, can not rule out an increase as early as March.
Other indices were mixed, a small increase in wages and the unemployment rate (from 4.7% to 4.8%) to a slight improvement in the participation rate in the labor market, a significant improvement even in the companies profits.
Data in other parts of the world are also good, European unemployment fell to 9.6%, reasonable PMI in the UK, 54.5 points (less than expected) and continuing positive growth and improving the European bloc, as the PMI there.
Trump’s second week at the White House clearly reflects his political strategy, ignores the balance of power issues and alliances. He continues to confront the European Union, but the same time attacking Russia (Crimean peninsula and Syria) and its ally Iran.
He was severely critical of China’s economic policies, but also goes against Germany and Japan “guards” the low exchange rate affects exports and US imports replacement.
He is confronting the allies of the United States, Mexico, and Australia.
Trump against the rest of the world.
Trump also complements its economic measures, eliminating regulations in the financial sector (as well as future drugs), trying to reduce the movement of workers from around the world to the United States, an enemy state, but also experts from around the world including high-tech.
The price of oil rose by 1.2%, the index of commodity prices was stable this week, per ounce of gold rose sharply at 2.4%. The dollar was down 0.7% against a basket of currencies. Since the beginning of the year, the dollar fell by 2.3% against a basket of currencies.
Political tension between the US and Iran. Iran is expected to continue its missile tests. She is aware that the EU is backing the opposition Trump nuclear agreement with Iran.
US Federal Court temporarily suspended the president orders that prevent the entry of foreigners from 7 Muslim countries.
Consumer Discretionary (IYC, XLY)- In view of the increase in income disposable light of the planned reform of the individual income tax.
Energy (XLE) – In view of the removal of environmental regulation, and support activities
Finance (VFH, XLF, KBE) – In view of the credit growth, net interest income, operating expense structure and quality of credit portfolios that show consistent improvement. Easing regulation of the financial system, improving consumer sentiment, expected reduction of corporate and income taxes, disposable income and the improvement in revenue funding as a result of the increase in interest rates, supports in investment in the financial sector to the near future.
Technology (QQQ, IGV, FDN) – In light of conflicting effects on the bottom line of corporate tax reduction, on the one hand, and increasing regulatory supervision of the sector, on the other.
MSCI Europe / S & P Europe 350 (hedged) – In view of the positive effect of the expansionary monetary policy of the ECB on the profits of multinational companies (HEDJ).
Germany (hedged) – In view of the increase in revenues of export-oriented light of the weakness of the euro against the dollar (DXGE).
UK (hedged) – In view of the interest rate cut and positive growth and postponement of exit from the block will benefit private spending of leisure (DXPS).
Nikkei2225 (hedged) – In view of the monetary and fiscal expansion parallel to support the weak currency profits of exporters (DXJ).