What I’m Watching This Week – 4 March 2014

The Markets

After making several attempts at setting a new all-time record high, the S&P 500 finally managed it at the end of the week. Buoyed by the possibility of a slowdown in Fed tapering, domestic equities more than erased the previous week’s losses; it was the first week so far this year that the S&P has ended in positive territory year-to-date.

Last Week’s Headlines

  • The U.S. economy grew a bit more slowly in Q4 2013 than previously thought (2.4%). According to the Bureau of Economic Analysis, that put growth for all of 2013 at 1.9%.
  • Home prices saw a slight (0.1%) decline in December, according to the S&P/Case-Shiller 20-City Composite Index–its second straight drop–but were 13.4% higher than the previous December.
  • Despite the frigid winter weather in much of the country, the Commerce Department said sales of new homes were almost 10% higher than in December and more than 2% higher than the previous January.
  • Orders for durable goods fell 1% in January, according to the Commerce Department. Though it was the third month of the last four to see a decline, it wasn’t nearly as bad as December’s 5.3% drop, and most of the decline was due to the often volatile transportation sector. Excluding the 5.6% transportation loss, new orders were up 1.1%.
  • Tokyo-based Mt. Gox, at one time the largest Bitcoin exchange, filed for bankruptcy following days of suspense after its website went dark. The company said hackers may have made off with roughly 750,000 bitcoins owned by customers and 100,000 of its own–the equivalent of nearly half a billion dollars’ worth of the virtual currency. Meanwhile, Federal Reserve Chair Janet Yellen told a congressional committee that the Fed has no authority to regulate Bitcoin but suggested that Congress could look into doing so.
  • Yellen also told Congress that the Fed is keeping a close eye on signs of weakness in economic data over the last month and is prepared to slow its tapering efforts if necessary. The Fed wants to assess the extent to which the weakness was the result of a slowing economy or simply lousy weather.

Eye on the Week Ahead

In addition to Friday’s jobs numbers, investors will be watching the European Central Bank on Thursday to see if any additional monetary easing policies might be announced. On Wednesday, the Chinese government will announce its forecast for economic growth there in 2014. Finally, the tense situation in Ukraine could also factor into the psychology of the markets.