Statistic of the Week:
While common wisdom tells us to paint our homes in neutral colors to help sell them quickly and at a higher price, a recent study shows otherwise. Homeowners that painted bathrooms light powder blue to periwinkle received an extra $5,440 on average, and a navy or charcoal front door added an average $1,414 to the final sale price.
The Bank of England conducted its first rate hike in over a decade last week. The BOE raised short-term target rates by 0.25% to 0.50%. Despite Brexit, inflation at 3% is above the central bank’s target of 2%. The economy is showing more resilience than many economists had predicted.
Market Moving Events:
Tuesday: JOLTS Wednesday: Petroleum Status Report Thursday: Jobless Claims, Wholesale Trade Friday: Consumer Sentiment, Treasury Budget
Domestic stock indices are starting the week at record highs. Both the DJIA and S&P 500 closed Friday at never-seen-before levels. While last week’s gains were light (the S&P was up 0.23% and the DJIA rose 0.45%),1 both have notched weekly gains for eight weeks running.2 In the month of October, the S&P 500 had record closes 11 times (there were only 22 trading days).3 Low volatility, decent earnings, a tax plan that seems achievable, and a Federal Reserve Chairperson who appears to endorse the status quo on current monetary policy, all have shaped investor sentiment in a positive direction. Interest rates were largely un-phased by these events; the 10-year Treasury closed Friday with a yield of 2.42%.4 The nomination of Jerome Powell as Fed Chair to replace Janet Yellen in February was greeted positively by market watchers. Powell is considered to be Yellen’s “ally” and it’s likely he will continue current policy (a welcome signal to markets).5 His nomination coincided with the busiest section of the earnings calendar; analyst expectations of earnings growth of about 9.5% year-over-year seems to be coming to fruition6 – helping allay fears of an imminent bubble (or bust). Lastly, the Republican tax plan was released with few surprises or items that would likely be considered a “poison pill.” (We will see if the GOP can stay unified long enough to pass the legislation). A quick passage without excess political squabbling will likely contribute to already strong investor and consumer sentiment figures. - Dan McElwee, CFP®
Chart of the Week: