Unusually cold weather did not stand in the way of stocks rising in the first week of 2018. Extreme cold temperatures hit the Plains and Midwest states while a “bomb cyclone” blasted the East Cost. This week’s jobs report reflected fewer hires, but underscored continued tightness in the labor market as the unemployment rate remained at 4.1%. North and South Korea opened a communication line to discuss the upcoming Olympics and a potential warming of relations as President Trump and Kim Jong Un continued to spar on Twitter. Iran protesters, disappointed with lagging economic growth and advocating for better civil rights, faced arrests and violence as the Iranian government cracked down.
Stock markets were back to the races this short week, with emerging markets up 4.3% on the week fueled by growth expectations and recent strength in commodity prices. The one year numbers for emerging markets are breathtaking but are still well behind their domestic and developed counterparts on a longer term basis. Intermediate fixed income funds fell back a bit this week as the 2-5 year yields rose slightly. Floating rate, high yield, and emerging market debt were the counterpoints to this trend – each marking gains. The hedge fund ETF benchmark finally experienced a solid trailing twelve month return, but over three and five year spans the returns are similar to bond funds.