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🎙 "Some boast of being friends to government; I am a friend to righteous government, to a government founded upon the principles of reason and justice; but I glory in publicly avowing my eternal enmity to tyranny." - See who said it and why it matters at the bottom.
Investors have gotten very bullish in the past two weeks, but it's not stocks they're buying, it's bonds — especially highly rated, low-yielding investment grade corporate bonds.
Why it matters: Unlike in past market rallies when cash flooded into traditionally risky assets like stocks and high-yield bonds, money is flocking to traditionally safe alternatives.
Driving the news: In the week ending Jan. 8, bond funds tracked by the Investment Company Institute saw the highest level of inflows on record. That theme continued in the week ending Jan. 15, with the fourth highest inflows ever.
What's happening: Strategists say investment grade bonds — issued by companies that have been given top ratings, above BBB, by major credit ratings agencies — are now en vogue. This is because investors remain worried about a major stock market downturn, but still want to chase yield and strong returns, which IG bonds delivered in 2019.
The big picture: The flows also are a product of the current economic environment, analysts say.
Further, the Fed is expected to be on hold and trade tensions between the U.S. and China have simmered, but global economic data have not yet pointed to a solid rebound or a deterioration.
What's next: The ECB holds its policy meeting today, with the Fed and other major central banks to follow in the coming days, but no major policy shifts are expected.
The phase one U.S.-China trade deal is unlikely to provide a significant boost to the U.S. economy, according to a Reuters poll of 100 economists. (Reuters)
Boeing pushed back estimates of when federal regulators would clear the company to fly its 737 MAX again, but CEO Dave Calhoun says he hopes to resume production months ahead of the official go-ahead. (CNBC)
S&P 500 companies are poised to see a 2.1% decline in earnings along with net profit margins of 10.7%, FactSet data shows, based on reports from the companies that have so far reported their results from the fourth quarter of 2019.
What it means: "If 10.7% is the actual net profit margin for the quarter, it will mark the first time the index has reported four straight quarters of year-over-year declines in net profit margin since Q4 2008 through Q3 2009," FactSet senior earnings analyst John Butters writes.
The share of workers represented by a union fell again in 2019, data from BLS released Wednesday showed, continuing a consistent decline seen since the late 1970s.
Why it matters: Many economists and labor analysts attribute the slow growth of wages in recent years to the lack of union representation and ability of employees to collectively bargain with management, among other factors like globalization and firms' loss of pricing power.
By the numbers: There was an increase of 50,000 workers in the private sector represented by unions, but it failed to keep pace with overall gains in private-sector employment, dropping the share of workers slightly, from 7.2% to 7.1%.
What they're saying: “The share of workers covered by a union contract is well less than half of what it was 40 years ago — caused in large part by fierce corporate opposition spending millions of dollars on anti-union campaigns and lobbying the government to weaken labor laws,” Heidi Shierholz, director of policy at the Economic Policy Institute, writes in a note.
After being one of the weaker sectors of the U.S. economy in the first half of 2019, the housing sector rebounded, spurred by a trio of U.S. interest rate cuts from the Fed that lowered the cost of mortgages.
Driving the news: U.S. existing-home sales rose 3.6% from November to an annual rate of 5.54 million in December and jumped nearly 11% from a year ago, according to the National Association of Realtors.
Yes, but: There are clouds on the horizon for 2020, as declining home affordability continues to be a concern, especially for first-time home buyers.
Watch this space: “Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” Lawrence Yun, NAR’s chief economist, said in a statement.
Global equity prices have largely bounced back from the selloff after the first reports of the coronavirus outbreak in China, but traders are still punishing companies tied to Wuhan, China, the city at the center of the outbreak.
Driving the news: China suspended bus and subway lines in the city and closed outbound channels at train stations and airports, effectively shutting the city, as the death toll from the outbreak rose to 17, state newspaper Global Times reported.
What happened: "Wuhan Department Store Group, which operates several malls in Wuhan, lost 3.1% to head for a weekly drop of 16%. Hubei Heyuan Gas Co., which generates all of its revenue from Hubei province, extended its two-day drop to 10%, the biggest on record," Bloomberg reports.
John Hancock, president of the Second Continental Congress and the first (and third) governor of Massachusetts, was born on Jan. 23, 1737.