The minutes of the Federal Reserve’s monetary meeting in December reveal a tolerance among policymakers for delaying additional interest-rate hikes. Low and stable inflation is a factor in the dovish message. Will tomorrow’s December report on the consumer inflation index (CPI) provide additional support for expecting a pause in the Fed’s recent monetary tightening?
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Partial gov’t shutdown headed for fourth week as talks fall apart: The Hill
Trump may declare nat’l emergency to build the wall Dems won’t finance: WSJ
Democratic-led House passes bill to reopen Treasury, IRS and SBA: The Hill
N. Korea’s Kim reportedly planning for second meeting with Trump: BBC
Fed minutes: Fed ‘can afford to be patient’ about future rate hikes: CNBC
US withdrawal from Syria will be slower than Trump suggested: CNN
Analysts note progress in latest round of US-China trade talks: CNBC
Will the US economic expansion die of old age? Bloomberg
VIX Index fell on Wednesday to lowest close since Dec 4:

The Federal Reserve’s recent run of raising interest rates is expected to hit a wall in 2019, according to Fed funds futures. After four rate hikes in 2018 and nine since the current cycle of tightening began in 2015, the crowd is currently anticipating that policy will remain on hold for the rest of the year, according to CME data.
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Trump demands border wall in TV speech: Reuters
House Democrats set to test GOP with bill to re-open gov’t: Reuters
World Bank predicts global growth will slow in 2019 to 2.9%: Reuters
Signs of progress in US-China trade negotiations: WSJ
Eurozone unemployment rate dips to 7.9% in Dec, lowest since 2008: Eurostat
Partial gov’t shutdown is taking a toll on housing, say Realtors: Bloomberg
Consumer credit growth stayed strong in November: MW
US Small Business Optimism Index fell in Dec to lowest since 2016: WSJ
Eurozone economic sentiment fell to 2-year low in Dec: RTT
Weak industrial output in Germany stoke recession worries: CNBC
US job openings fell in November, but remain elevated: Reuters

It’s anyone’s guess if the recent rebound in US equities will soon push the S&P 500 Index to a new high. What we do know is that the market has staged a solid bounce so far. For the eight trading days since Christmas Eve’s close, when the S&P’s current drawdown hit bottom, the index is up a solid 8.4%. There’s still a long climb ahead to recover the remaining ground lost since the S&P’s previous peak, set on September 20. To reach that summit the index would have to rally roughly 15% over yesterday’s close (January 7).
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Trump to address nation on Tues night to address border-wall issue: Fox
Partial gov’t shutdown is starting to reverberate across US economy: NY Times
House GOP leaders suggest support fading for Trump’s shutdown fight: Politico
Analyst: US recession risk is elevated without end to US-China trade war: CNBC
Hints of progress in US-China trade talks: Bloomberg
North Korea’s Kim visits China for talks with President Xi: Reuters
Samsung is 2nd tech giant to suffer from China’s softer economy: Bloomberg
China’s economic growth has slipped below the key 6% mark, says analyst: CNBC
Small-cap stocks in focus as haven from big-cap woes: WSJ
US job openings increasingly outnumber jobless workers: Reuters
Germany’s weak industrial sector raises recession risk: Bloomberg
US ISM Non-Mfg Index: growth slows to 5-month low in December: MW

A powerful rally on Friday helped boost prices on a weekly basis for most markets around the world via a set of exchange-traded products. With the exception of US real estate investment trusts (REITs), all the major asset classes ended the trading week on January 4 with gains.
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Bolton, in Israel, softens Trump’s plans for a quick exit from Syria: Politico
US Navy ship sails near disputed islands in the South China Sea: Reuters
Partial gov’t shutdown is now tied for 3rd longest with no end in sight: USA Today
Fed Chairman Powell hints at possibility of rate-hike pause in 2019: WSJ
Fed’s Mester: Subdued inflation could stop rate hikes: CNBC
Survey data points to slowdown in global growth to 27-mo low in Dec: IHS Markit
US Services PMI: ‘solid’ growth in December: IHS Markit
Eurozone growth falls to slowest pace in over 4 years via PMI data: IHS Markit
Retail spending in Europe rose more than expected in November: Reuters
Eurozone inflation slips to softest annual pace in 8 months: FT
US wages rose 3.2% in Dec from year ago–fastest gain since 2009: Bloomberg
Surge in US payrolls in Dec suggests recession risk is low: MW

● Too Smart for Our Own Good: Ingenious Investment Strategies, Illusions of Safety, and Market Crashes
By Bruce I. Jacobs
Summary via publisher (McGraw-Hill Education)
Financial crises are often blamed on unforeseeable events, the unforgiving nature of capital markets, or just plain bad luck. Too Smart for Our Own Good argues that these crises are caused by certain alluring investment strategies that promise both high returns and safety of capital. In other words, the severe and widespread crises we have suffered in recent decades were not perfect storms. Instead, they were made by us. By understanding how and why this is so, we may be able to avoid or ameliorate future crises—and maybe even anticipate them.
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Companies dramatically increased hiring in December, according to this morning’s monthly update from the US Bureau of Labor Statistics. The substantially larger-than-expected increase in private-sector employment suggests that the economic outlook is considerably brighter than implied by the stock market, which has fallen sharply in recent months.
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