Encouraging trade news with China pushed the Dow out of correction territory today, which means it is no longer more than 10% lower than its recent high-water mark. Sources close to the Chinese/U.S. trades talks leaked that China is willing to go on a shopping spree in the U.S. The plan would be to increase U.S. imports to China over the next 6 years, which would see a trillion dollars of U.S. goods sold to China. During this same time period, China would reduce the trade deficit with the goal of having no trade deficit by 2024. Traders were more excited than a Husky fan during an Apple Cup game, and markets surged another 336 points, finishing the week at 24,706. Market indexes up significantly since the start of the year as the Dow is now up about 6%, the S&P is up 6.5%, and NASDAQ has gained almost 8%. Trade talks will continue with China as Vice Premier, Liu He, is scheduled to be in D.C January 30th.
Another area of the U.S. economy that is rolling along is energy. The U.S. is on pace to be the largest energy producer by the end of the year. Currently, the U.S. can pump 11.8 million barrels a day which is just behind Saudi Arabia who can pump 12 million barrels per day. Estimates from the International Energy Agency show that the U.S. is on pace to increase their output by another 1.1 million barrels by the end of the year, thus supplanting Russia and Saudi Arabia for the top spot. While oil prices will still be somewhat dependent on whether Saudi Arabia plans to hold back production, it is a step towards stabilizing, and having more control over, energy prices.
Netflix reported earnings today, and while they exceeded expectations on profitability by 25%, they “missed” on revenue, only generating $4.19 billion in Q4 and increasing revenue 27.4% year over year. The stock sold off 4% even though they added another 29 million new paid users during 2018. Former NBC executive, Tom Rogers, sees Netflix miles ahead of their competition, and believes they could have 175 million subscribers by the end of the year, and 300 million five years from now. Netflix spent $8 billion on original content last year and expects to increase that this year. This was referenced in their earnings call, as years ago they worried a day would come when their content providers would no longer sell them content.