Your Weekly Market Blip 1/29/16

Your Weekly Market Blip 1/29/16

The Dow rallied on news that the Bank of Japan had unexpectedly adopted a negative interest rate policy. In other words…if you buy Japanese bonds you will pay interest instead of making interest. Imagine buying a house with a mortgage like this!!! The global currency war which is now a race to the bottom as supposedly intelligent central bankers see who can devalue their currency the most. This is a two edged sword for the US. On one hand we benefit from cheaper oil, travel and imports but on the other hand our exports get more expensive since it is hard to compete against someone producing a product in a country whose currency is down 40%. It’s a crazy world!
The Dow gained 396 today to close at 16,466 on heavier trading volume. For the week the Dow gained 2.2% and for the month it was down about 5.5%.
Early Q4 GDP numbers were reported and the US economy slowed from 2% growth in the third quarter to 0.7% in the fourth quarter. Soft consumer spending and falling exports (thanks to a strong dollar) were primary reasons behind the drop. For all of 2015 the GDP growth rate held steady at 2.4% which was the same level in 2014.
Amazon reported earnings and they missed estimates sending shares lower. Revenue was higher by 22% held back in part by currency issues. Net income gained 122% but was well below estimates sending shares lower at the opening bell. Prime membership was up 51% and cloud services were higher by 69%. The company continues to see forward revenue growth of 18% to 29% and is now investing in shipping and logistics.
Microsoft also reported quarterly numbers and revenue was off 10% while profits gained 11%. The street however liked the results because Microsoft’s cloud business grew 29% and looks promising for the future.
Oil continues to hold recent gains with WTI crude gaining 1.3% to $33.66 per barrel. Natural gas was higher by 5.9% and gold held steady at $1,117 per ounce.