Was this email forwarded to you? Sign up here.
Illustration: Lazaro Gamio/Axios
The Dow closed higher for the week on Friday for the fifth straight time. But rather than celebrate the market's remarkable bounce-back since its Christmas Eve nadir, investors have publicly focused on what has or could go horribly wrong.
Interestingly, the flow of dollars has told a different story.
What it means: While they're continuing to buy stocks, fund managers and analysts are beginning to worry out loud that the partial government shutdown that ended on Friday — at least temporarily — will come back to haunt the market.
The shutdown left around 800,000 federal workers without pay for 35 days, and U.S. consumer confidence fell by the most in three years this month.
According to the White House's projections, the government shutdown that ended Friday had already eroded the positive impact of tax reform and spending increases signed by Trump in 2017.
What they're saying:
Hassett asserted last week that "the second quarter would be humongous if the government reopens," and could regain much of its lost growth, even though government output remains lost for the quarter.
Why it matters: Much, but not all of the growth would be recovered after the government reopens.
Of note: Economists polled by Reuters estimate the shutdown, which started on Dec. 22, actually knocked 0.2% off of quarterly GDP growth every week, double the White House's estimate.
The S&P 500 was far more volatile in 2018 than it was in 2017, and almost touched a bear market. But it has still risen more than 400 points since Trump's election in November 2016.
"We tend to talk too much about risk. We tend to talk about all the ways that we could be wrong and the ways that the economy could go bad. One of the things our team's been talking about is what could go right. What could surprise us to the upside? And that is, right now, the U.S. consumer. It's getting some air time, but it’s not getting enough.
If rates stay low, that could be a reason to borrow more, that could be a reason to start investing in real estate again, so maybe the housing market firms up a little bit. Gas prices are pretty low that could be a reason to increase travel this year.
Slowing growth or peak growth does not mean recession ... Slower growth doesn't mean that stock prices have to go negative. I love the saying that the market has predicted nine of the last five recessions. It's true because the market tends to react very emotionally in the moment.
We don't expect double-digit growth or a rip-your-face-off rally, by any means, but we also don't expect a bear market and we certainly don't expect a recession."— Liz Young, senior investment strategist at BNY Mellon
What they're saying: "From now, the odds are minimal (to find more people alive) and it is most likely we will recover only bodies," Zema told reporters late Friday.
Why it matters (to the market): In addition to being the world's No. 1 producer of iron ore, the strong performance of Brazilian assets helped power emerging markets indexes late in the year.
This impact of the environmental tragedy could be felt in a number of ways.
The bottom line: "This calls into question the financial viability of Vale going forward because of the sheer scale of their potential liabilities," Tom Goodhead, a lawyer at SPG Law, told Reuters.
If Humira, the drug that treats a range of autoimmune conditions, were its own company, it would have almost the same amount of annual sales as Southwest Airlines or Visa and would be more than twice the size of the Hilton global hotel chain, Axios' Bob Herman writes.
The big picture: AbbVie has several other drugs, but Humira is its financial bread-and-butter. Humira's sales likely will decline this year as more biosimilar versions hit European markets, but the drug will still rake in more revenue in the U.S. as its net annual price exceeds $40,000.
Apparently, we're all supposed to be saying, "En why Es Ee." As if we aren't busy and don't have more valuable things to do with our oxygen.
Editor's note: Friday's newsletter was changed to state that the Tubbs fire affected Santa Rosa rather than Santa Clara and that Nomura's Siobhan Morden assisted with data on protests from Venezuela.
Days without a factual error: 0