Rover’s Weekly Market Brief — 1/26/2018

Economy

The advance estimate of 2017 Q4 GDP was an annualized 2.6% rate, down from Q3’s 3.2% rate and widely missing analyst’s projections for 3.0%. On a yearly basis, GDP growth was 2.3% compared to 1.5% for 2016. Positive contributions to GDP in Q4 came from increases in the seasonally adjusted annual rates for consumer spending (+$111.5 billion), business investments (+$38.7 billion), exports (+$37.1 billion), residential investment (+$16.3 billion), and government spending (+$21.2 billion), but they were offset by inventory decreases (-$29.3 billion) and increases for imports (+$92.1 billion). An increase in disposable personal income (+3.9% Q4 vs 2.1% Q3) and a drop in the personal savings rate (2.6% Q4 vs 3.3% Q3) increased available consumer cash, but an increase in the Personal Consumption Expenditure (PCE) inflation rate to +2.8% indicated rising prices.

The trade deficit in goods ^[6] increased by +2.3% in December to $71.6 billion with a $5.2 billion increase in imports to $209.2 billion outpacing a $3.6 billion increase in exports to $137.6 billion. Exports increased for military goods (+10.1%), foods (+3.9%), capital goods (+2.7%), consumer goods (+2.7%) and industrial supplies (including petroleum products ^[7]) (+2.6%), but dropped for automobiles (-0.6%). Imports increased for consumer goods (+6.0%), automobiles (+3.4%), and food (+1.9%). On a yearly basis, exports were up +9.2%, with significant increases for industrial supplies (+18.3%), automobiles (+9.4%), and consumer goods (+6.2%), while imports increased +10.4%, with notable increases for capital goods (+13.2%), industrial supplies (+12.5%), consumer goods (+12.2%), and military goods (+10.2%).

New orders for durable goods ^[8] were up +2.9% (+$7.0 billion) in December to $249.4 billion for the second consecutive monthly increase after a +1.7% increase in November. Most of the increase was due to a +7.4% increase in new transportation orders, with a +55.3% increase in military aircraft orders and a +15.9% increase in civilian aircraft orders. Excluding transportation, new orders were up 0.6%, primarily due to a +19.5% increase in defense capital goods with slowdowns for computers (-4.4%) and communications equipment (-3.2%) taking away from those gains. Core capital goods, which exclude both transportation and defense, dropped -0.3%, but November’s -0.1% drop was revised upward to a +0.2% gain.

Upcoming Economic Reports:

Monday January 29 – Personal Income and Outlays

Friday February 2 – Employment Situation

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
Lockheed Martin (LMT) [9]	Pfizer (PFE) [10]	Microsoft (MSFT) [11]	Apple (AAPL) [12]	Chevron (CVX) [13]
Dominion Energy (D) [14]	McDonald’s (MCD) [15]	Facebook (FB) [16]	Amazon.com (AMZN) [17]	Merck & Co (MRK) [18]