Business Report - Week 4 (From 28th January to 1st February 2019)

Published on February 04, 2019

Business Report - Week 4 (From 28th January to 1st February 2019)

Business Report - Week 4 (From 28th January to 1st February 2019)

Compared to the strong start of the year, the mood of the market has calmed. Investors remain cautious and watchful about the economy. Indeed, the S&P 500 remains 10% below its September peak, several reports released have been mixed with strong employment data offset by softer industrial demand, corporate earnings are still expected to be up slightly this year but estimates are now slipping to the flatline. Some analysts argue that we will be entering an earnings recession this year (2 consecutive quarters of negative earnings growth).

  • Boeing reached a record high earnings last Q4 and expects similar annual earnings like 2018.

  • Microsoft reported strong sales ($9 billion) from its cloud computing business.

  • Visa reported a double-digit rise in quarterly profit.

  • General Electric beat revenue estimates.

  • McDonald’s reported strong global sales but struggled to attract more U.S. diners.

  • 3M, Verizon, Harley Davidson, Pfizer, and Lockheed Martin cut their profit forecast for 2019 for various reasons such as tariffs, increase in raw material, slower global growth.

  • Caterpillar and semiconductor company, Nvidia, fell short last Q4. Other companies (i.e. Intel) blamed tariffs, which have shrunk revenues.

  • Apple reported a drop in earnings and revenue in Q4 2018. iPhone sales and slowing demand in China reduced revenue.

  • Amazon is now the most valuable publicly traded US company.

  • The US charges Huawei and its CFO, Meng Wanzhou, with money laundering, bank and wire fraud, and conspiracy.

  • China-US trade talks are encouraging but both parties remain cautious since there is still a month to find an agreement before another tariff hike escalation.

  • Chinese factory activity has shrunk for the second month in a row. As a result, China’s factories experience falling profits, decelerating factory inflation, and tariff uncertainty. This is a reminder for Chinese negotiators why they need to come to an agreement by March 1st.

  • The US has imposed sanctions to Venezuela’s state-owned oil company.

  • The Congressional Budget Office estimates that the partial economic shutdown cost the US economy a total of $11 billion, which $3 billion will never be recovered.

  • Consumer confidence fell to 18-month low due to the partial government shutdown and the volatile financial markets.

  • The US economy added 304’000 jobs (non-farm payrolls) in January, despite the longest shutdown in US history; unemployment rate ticks up to 4%.

  • The Fed pledged patience when it comes to interest rate hike. As result, the Dow Jones crossed back over 25,000 points. Jerome Powell explained this Fed’s decision due to slow growth, particularly in China and Europe. There are several unresolved government policy issues (UK Brexit, China-US trade war, US Government shutdown).

  • Former Starbucks CEO, Howard Schultz, is considering running for the next US Presidential elections.

  • Housing market shows signs of decline. Pending home sales dropped by 9.8% compared with a year ago marking 12 consecutive months of annual declines.

  • Italy fell into recession at the end of 2018, capping a year of political turmoil, higher borrowing costs and fiscal tensions.

  • Crude oil had an incredible increase over the course of January (up 18.45%).

  • US Markets monthly performance
    - Dow Jones +7.2% 
    - Nasdaq +9.7%
    - S&P 500 +7.9% 

  • U.S. Markets weekly performance
    - Dow Industrials +1.3%
    - Nasdaq Composite +1.4%
    - S&P 500 is +1.6% 

Both the Dow Jones and the Nasdaq posted their sixth straight weeks of gains.

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