This week, politics and geopolitical issues have dominated the markets. In the United States, the republicans and democrats have continued to find consensus to prevent a potential government shutdown. Democrats have vowed not to support a deal that does not include the Dream Act that protects the dreamers.
On Thursday, a deal between the two was thought to have been reached but the president and republicans opposed it.
In Germany, Angela Merkel made progress in her government formation process. This week, we saw major meetings between Merkel and Schultz who agreed to move to the next stage of negotiations. In the UK, Theresa May started to reconstitute her cabinet amid criticism.
Among the major movers this week was crude oil which rallied to reach the highest levels since 2014. The rally came as data showed that United States’ oil rigs continued to decline. Data from API and EIA showed increasing drawdowns which is an indication of increasing demand.
As of this writing, WTI is trading at $63.17 while Brent is trading at $68.75.
The week was difficult for cryptocurrencies. Bitcoin struggled to recover from previous highs. The biggest sell off happened on Thursday when reports from South Korea indicated that the country would ban cryptocurrencies exchange. Bitcoin is currently trading at $13951 while Ethereum is trading at $1265 which is higher than last week’s ‘close’.
On currencies, the dollar was a major loser this week. The decline shown above came as a result of improved economic data from abroad coupled with fears of a shut down. In Europe, the minutes from the ECB showed that members were interested in hiking.
As shown below, the dollar lost ground against most of its peers.
Today, the Bureau of Labor Statistics (BLS) released its inflation data that showed consumer prices rose by 0.1% versus the expected 0.2%. Retail sales rose by 0.4% and the core sales revised higher.
This week, the earnings season started ‘officially’ in the United States. Today, Blackrock, Wells Fargo, PNC Financial, and JP Morgan released results. They all beat analyst expectations and as expected, they all announced major one time hits because of the tax reform.
A bog mover on stocks this week was Eastman Kodak, whose stock doubled after announcing a blockchain technology.
Global stocks continued to rise with the only challenge coming on Wednesday when reports from China indicated that the country would stop buying American treasuries. This report led to a major decline in American stocks.
However, this news was not factual which led to a rebound on Thursday.
Remember, China is the biggest holder of American debt and it is highly unlikely that the country would want to cause instability in the country.
Next week, we will get quarterly results from Citi, United Health, The Charles Schwabb, Kinder Morgan, Interactive Brokers, Alcoa, Bank of America, Atlassian, Bank of new York Mellon, Morgan Stanley, Wipro, and Schlumberger.
Other notable news this week were. Today, Wall Street Journal reported that oil trader and legend, T. Boone Pickens was retiring and converting his fund into a family office. Boone Pickens is one of the most successful oil traders in the world. His retirement comes a few months after another legend, Andy Hall closed his oil fund last year. Also, Anthony Ward, one of the best known Cocoa trader ended his fund in December.
Also, this week, Dropbox became the next big unicorn to announce plans to go public. At the CES event, technology companies like Samsung, LG, and NVIDIA announced their biggest technologies.