U.S. and World News
- President Trump has signed the Tax Cut and Reform Bill after the measure passed through both the House and Senate this week. On the business side, the sweeping bill will slash taxes for corporations, revamp how multinational companies are taxed (including a repatriation provision), and create a deduction for the owners of “pass-through” businesses. Most individuals and families will see their tax rates cut, in addition to a doubled standard deduction and increased child care credit. Also included in the bill was the repeal of the individual mandate which was the provision of Obamacare that required Americans to carry a certain level of health insurance or else face a fine.
- Also in Washington D.C., Congress has passed a stopgap spending bill that keeps the government funded through mid-January. This will push contentious policy debates into next year, in particular surrounding what is called a “pay-go” waiver. This provision suspends rules that bar the government from deficit creating new programs unless there is enough money in the current year’s budget to pay for them.
- Markets were up this week as the tax reform bill was finalized and signed by President Trump. The S&P gained 0.30%, closing at 2,683. The Dow Jones rose 0.42% for the week and closed at 24,754. Year to date, the S&P is up 22.23% and the Dow is up 28.28%.
- Interest rates moved higher on the heels of the tax reform bill passage. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.25% and 2.48%, respectively.
- The spot price of WTI Crude Oil rose by 1.80% this week, closing at $58.33 per barrel. Year to date, Oil prices have risen 8.57%.
- The spot price of Gold ended the week up by 1.46%, closing at $1,274.72 per ounce. Year to date, Gold prices are up 11.09%.
- Initial jobless claims rose 20,000 from last week, coming in at 245,000. The largest increases were in New York (4k), Pennsylvania (3k) and California (2k). The four week moving average for claims rose to 236,000.
- Housing starts rose 3.3% in November, beating expectations for a -3.1% decline. Single family housing starts rose by 5.3% in the month, while multi-family starts edged down -1.6%.
- The headline PCE index (measure of inflation) rose 0.2% in November, slightly below expectations of 0.3%. Over the last 12 months, headline PCE has risen 1.8%.
- Core PCE (excludes food and energy, Fed’s preferred inflation metric) rose 0.1% in the month, in line with expectations. Over the last 12 months, Core PCE has risen 1.5%.
Fact of the Week
- Every Christmas Eve and New Year’s Eve (or the trading day prior if they fall on a weekend) traders on the floor of the New York Stock Exchange take some time out of their schedule to gather and sing “Wait Till the Sun Shines, Nellie.” With a theme of optimism coming from waiting for the rain to pass, the song has been a tradition on the NYSE floor dating back to the years following the crash of 1929 and the Great Depression.
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