Market Update: Thurs, Jan 17, 2019 | LPL Financial Research


Daily Insights

EM still looks like a better value than Europe. The MSCI Emerging Markets (EM) Index and S&P 500 Index are both trading at 5-6% discounts to their 25 year averages, while Europe is trading in line with its average, on a forward price-to-earnings ratio (PE) basis. Though the nearly 20% Japan-driven discount for the EAFE relative to the S&P 500 looks attractive, the EM discount to the S&P 500 is larger at 26% and still, based on fundamentals, looks like the better place to be for suitable strategies.

Brexit: Now What? Following the expected defeat of British Prime Minister Theresa May’s Brexit plan in Parliament on Tuesday, and her survival of the subsequent confidence vote, skepticism has built that any deal will be struck by the March 29 deadline. As a result, the odds have increased that the U.K. will stay in the European Union. A second referendum on Brexit is one possible path to that end. Even in a hard Brexit scenario where the U.K. leaves without a deal, the economic damage globally is likely to be manageable. Consider that the U.K. economy has not performed any worse than the broader European economy in recent months.

The shutdown drags on. The U.S. government shutdown has now stretched into Day 27. Past shutdowns have been a non-event for the U.S. economy and stocks, but we’re in uncharted territory now. On the LPL Research blog post due out later today, we’ll outline the economic implications of a prolonged shutdown given the current macroeconomic backdrop.

Beige book follow-up, Philly Fed Index bounces back. The Federal Reserve’s (Fed) Beige Book, a report about current economic conditions across the 12 Fed Districts, indicated overall economic activity increased across most of the U.S. last month. Reported growth was modest to moderate with the majority of districts indicated that manufacturing expanded, consistent with the Philadelphia Fed survey released this morning. However, the Philadelphia Fed Index bucked the recent trend of weaker manufacturing reports, registering 17.0 vs. 10.0 consensus expectations, and rebounded strongly from December’s 9.1 reading, largely driven by new orders, which hit their highest level in six months. Though it’s only one indicator, the aggregate data suggest the U.S. economy is seeing pockets of moderating growth but remains on firm footing.


Click Here for our detailed Weekly Economic Calendar


  • Housing Starts (MoM, Dec)
  • Building Permits (MoM, Dec)
  • Initial Jobless Claims (Jan. 12)
  • Eurozone CPI Report (Dec)
  • Japan CPI Report (Dec)
  • Japan Industrial Production (Nov)


  • Industrial Production (MoM, Dec)
  • University of Michigan Sentiment Index (Preliminary, Dec)



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Index data obtained via FactSet


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