Week of Jan 27 2017 Weekly Recap & The Week Ahead

“The two most powerful warriors are patience and time.” – Leo Tolstoy

1. Trump Signed Executive Order to Renegotiate NAFTA and Intent to Leave TPP — President Donald Trump signed an executive order formally withdrawing the United States from the 12-nation Trans-Pacific Partnership trade deal. In an Oval Office ceremony, Trump also signed an order imposing a federal hiring freeze and a directive banning U.S. non-governmental organizations receive federal funding from providing abortions abroad. Trump is also looking to begin NAFTA negotiations with Canadian Prime Minister Justin Trudeau.
2. Dow Crosses 20,000 — the Dow took almost 103 years to reach 10,000 in March 1999, and another 17 years to double to reach 20,000. However, the last 1,000 points to reach the 20,000 milestone took just 42 trading days. The blue-chip index has been propelled by President Trump’s moves to promote infrastructure projects and cut regulation, while recording the all-time high during his first week in office. As a whole, the U.S. stock market has gained $2T in wealth since Election Day.
3. Mexico’s President Cancel Meeting With Trump — Mexican President Enrique Pena Nieto canceled his meeting with Trump after he formally announced plans to build a border wall. The U.S. President also slashed funding to so-called sanctuary cities in the start of a strategy to tighten immigration controls. Construction of the wall will begin within “months,” according to Trump, stating Mexico would reimburse the U.S. for the cost “100%.”. President Trump also impose a temporary ban as early as today on virtually all refugee admissions to the U.S. from “countries that have tremendous terror.” “Our country has enough problems without allowing people to come in who, in many cases or in some cases, are looking to do tremendous destruction,”.
4. 4Q GDP U.S. Growth Cools on Trade Drag as Business Spending Rises — Gross domestic product, the value of all goods and services produced, rose at a 1.9 percent annualized rate following the prior quarter’s 3.5 percent gain that was the largest increase in two years, Commerce Department reported. The results cap growth of 1.9 percent for the full year and reinforce the leading role of household purchases while showing that businesses are starting to spend again. The strong job market and optimism among consumers and companies for President Donald Trump’s policies are likely to keep growth humming along in 2017, though tensions over trade could temper any gains.
5. AAII Bullish Sentiment — last week’s AAII bullish sentiment figures, which showed that bullish sentiment fell by roughly five points (37.01% to 31.58%) for the second five-point decline in the last two weeks. That has not happened since May 2016 right before the S&P 500 (SPX/2294.69) fell 6.0%. Jeffrey Hirsch, editor at Stock Trader’s Almanac noted:
“Since 1950, January S&P 500 gains of 2% or more corrected or consolidated in February 62.1% of the time. In the 20 years that the S&P 500 gained 4% or more in January, 65.0% of the time the S&P declined or finished flat (less than 1% gain) in February.”

The week ahead — Economic data from Econoday.com:

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