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Newsletter: In the Markets – Week-Ending March 24th , 2017

by Peter J. Creedon

Newsletter: In the Markets – Week-Ending March 24th , 2017

Crystal Brook Advisors

We Make Financial Planning Crystal Clear™

United States: Existing home sales slipped 3.7 percent in February but are still off to a strong start to the year. The decline was somewhat expected following January’s surprisingly strong 3.3 percent increase but February’s report did come in slightly below the consensus estimate and our own lower call. Sales have averaged a 5.56-million unit pace over the past three months and remain above their year ago levels nationally and at all four regional levels. We were expecting sales to come in below consensus, largely due to recent declines in pending home sales, which are contracts for the purchase of an existing home. Pending sales do a reasonably good job of anticipating the future direction of existing home sales but tend to overstate the magnitude of swings, particularly when you get a big down month like we did in January, when pending home sales tumbled 2.8 percent. Most of the drop in pending sales was in the West, which tumbled 9.8 percent, and the Midwest, which fell 5.0 percent. Both areas saw the return of more typical winter weather following milder weather in January. We do not expect existing home sales to precisely follow pending sales lower, just as they did not precisely follow them higher when pending sales spiked early last year. (1)

Europe: On March 25, 1957, the Treaty of Rome was officially signed by the six original members of the European Economic Community – Belgium, France, Italy, Luxembourg, the Netherlands and West Germany. The treaty led to the eventual creation of the modern-day European Union and symbolized closer ties across Europe on goods, labor, services and capital. (2)

Asia: The first thing you saw last year after walking out of Manila’s international airport was an expressway flyover construction project. It wasn’t scenic, and detours due to construction might have set back your taxi ride to the hotel in an already infamously congested city. But the 11.6-km project, the NAIA Expressway, opened at year’s end as a typical case of basic infrastructure work that is pushing the Philippine economy to expand faster than a lot of its peers around Asia. (3) The Philippines is just one growth engine for the region stretching from Japan to Singapore, and infrastructure booms are just one source of booming economies. (3) East and Southeast Asia, with its 2.2 billion population and ever-growing upper and middle classes, will demand a greater diversity of products as well as the raw materials to fuel growth.

Latin America: Meanwhile, Latin American businesses looking to expand globally must strengthen linkages to Asia, not only as the traditional supplier of cost-effective products, but also sources of capital and new technologies. This will be increasingly important as the U.S. market becomes progressively more difficult to access, especially for countries such as Mexico, as a feared trade war with new tariffs and non-tariff trade barriers could stifle Latin-U.S. trade. (4)

Monday 3/20 The SPDR’s Retail ETF (XRT) fell 1.5 percent, all but erasing its gains since Trump’s election as investors fretted that a border adjustment tax being pushed by Republicans in Congress would lead to higher prices for consumer products. (5)

Tuesday 3/21 The Dow fell by about 238 points Tuesday, a drop of more than 1%. It was its biggest slide of the year and biggest decline since the election. The broader S&P 500 was also down more than 1%. (6)

Wednesday 3/22 Shares of Nike Inc. (NYSE:NKE) were down 6.1% as of noon EDT Wednesday after the athletic footwear and apparel company released mixed quarterly results and light revenue guidance. (7)

Thursday 3/23 Futures for the Dow Jones industrial average, S&P 500 index and Nasdaq 100 were flat to slightly higher early Friday morning as White House aides told GOP lawmakers that President Trump is done negotiating and wants a House vote on the ObamaCare replacement bill on Friday. (8)

Friday 3/24 The Dow Jones Industrial Average DJIA, -0.24% was bouncing around in afternoon trade, most recently up 12 points, or less than 0.1%, at 20,667, after briefly turning negative as news flowed out of Washington around the vote. Goldman Sachs Group Inc. GS, -1.60% weighed on the blue-chip gauge, down more than 1%, and cutting nearly 20 points. (9) Market Close: The tech-heavy Nasdaq Composite Index COMP, +0.19% was up 31 points, or 0.5%, to 5,848. (9)

Contributor: Thomas Padula

(1) Wells Fargo Economic Group
(2) U.S. News
(3) Forbes
(4) The Diplomat
(5) Reuters
(6) CNN Money
(7)The Motley Fool
(8) investors.com
(9) MarketWatch

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