The second week of December 2016 was a big week as far as economically momentous event taking place right in the middle of it go. And yet, the S&P 500 once again behaved pretty much as expected, provided that what you expected was for investors to remain focused on the future quarter of 2017-Q2.
The apparent reason for that is straight forward. Even though the Fed surprised investors by indicating it was likely to hike short term interest rates three times in 2017 as opposed to the two times that it had previously indicated it would consider back in September 2016, the timing of the next rate hike is still expected to take place in the future quarter of 2017-Q2, which we can see thanks to the before and after snapshots that Mike Shedlock took of that particular expectation.
Meanwhile, here is our day-by-day summary and comments on what we identified as the week's significant market-driving news.
- Monday, 12 December 2016
- Oil jumps to highest since mid-2015, Fed hike on horizon
- Fed turns to Trump agenda with rate hike nearly in the bag
- Boeing board raises dividend, renews share repurchase authorization
- Boeing's 30% dividend hike is a good example of how a change in the fundamental driver of stock prices, expected future dividends, can alter our standard model's projections of future stock prices by lifting the expectations for dividends across each future quarter, which is visible because of the company's large market cap.
- Tuesday, 13 December 2016
- Wall St. adds to record rally, Dow approaches 20,000
- Stock, bond markets could see sharp declines: U.S. financial watchdog
- This story caught our attention because we can see a potential path to a S&P 500 that is 10% lower than it is, which we've previously described. The "U.S. financial watchdog" in this case is the little-known U.S. Treasury Department's Office of Financial Research, which was created as part of the Dodd-Frank financial regulation law. Like most analysts, their fear is based on the relative value of stock prices with respect to earnings, which is to say that they don't have a firm grasp on how stock prices really work.
- Wednesday, 14 December 2016
- Rising interest rates bite into U.S. mortgage activity
- Oil prices fall 3 percent on stronger dollar, renewed glut worries
- Dollar surges after Fed raises rates, signals faster rate hike pace
- Wall St. slides after Fed raises rates; energy weighs
- U.S. Fed raises rates for second time since Great Recession
- Thursday, 15 December 2016
- Friday, 16 December 2016
Barry Ritholtz has summarized the week's positive and negative economics and markets news.
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