Week of Dec 15 2017 Weekly Recap & The Week Ahead
“Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.” — John Templeton
1. Bitcoin Debut on CBOE Futures Exchange — futures on the world’s most popular crypto-currency – trading under symbol(“XBT) – surged as much as 25% to $18,850 during their debut session on the CBOE Futures Exchange, triggering two temporary trading halts meant to cool volatility earlier this week. About 2,700 contracts for January changed hands. Also, the SEC has issued a warning to investors on the dangers of putting their money into cryptocurrencies. “There are tales of fortunes made and dreamed to be made,” said Chairman Jay Clayton. “We are hearing the familiar refrain, ‘this time is different.'”
2. WTO’s Ministerial Ramping Up Trade Pressure on China — the WTO’s ministerials, the EU, Japan and U.S. will announce a new alliance to take on China. The three economies will target “severe excess capacity” in important sectors like steel and commodities, the role of illegal subsidies and abusing intellectual property rules to acquire strategic technologies.
3. GOP Raising Corporate Rate to 21% — GOP negotiators have reached a tentative agreement to raise the corporate rate in their joint House-Senate tax bill from 20% to 21%, according to The Hill. The higher rate could pay for a reduction in the top individual rate, which Republicans are talking about lowering from 39.6% to 37%. It could also pay for keeping more deductions for taxpayers, particularly in high-tax states.
4. FOMC Raised Interest Rates but Sticks to Go-Slow Approach — the central bank raised its benchmark federal funds rate by a quarter percentage point to between 1.25% and 1.5% — the fourth increase in a year. In addition, the central bank made no change to its forecast for inflation and struck a wait-and-see stance in light of persistently low inflation and a pending change in leadership.
5. AAII Weekly Sentiment — courtesy of BIG, according to this week’s sentiment poll from the American Association of Individual Investors (AAII), bullish sentiment increased from 36.9% up to 45%. That’s the greatest weekly increase in three months and the fourth straight week of increased optimism. The last time bullish sentiment increased for four straight weeks was back in early 2016, and we haven’t seen five straight weeks of increased bullish sentiment since 2012. It has now been a record 154 straight weeks since bullish sentiment last eclipsed 50%.
In addition, bearish sentiment saw a 6.1 percentage point decline this week, falling from 34.2% down to 28.1%. That’s the lowest weekly print for bearish sentiment in just over a month, but nowhere near the lowest levels of the year.
6. Final Version of the Republican Tax Bill Head to Congress This Week — If the tax bill is passed this week, the sectors that should benefit the most are: Financials, Retailers, Telecom, Transports, and smalll–cap stocks. Indeed, the small–cap Russell 2000 saw a big lift on Friday as it bounced off of its 50-day moving average. Copper’s recent rally is also suggestive of world–wide economic strength.
The chart below shows the three secular Bull Market since 1949.
The week ahead — Economic data from Econoday.com:
Tags: secular bull market