• U.K. GDP contracted 0.4% in December compared to the previous month, largely due to a fall in spending during the holiday period and Brexit uncertainty. The British economy grew by 0.2% in the last quarter of the year versus the prior quarter, disappointing analysts, who expected 0.3% growth.

• British manufacturing production slumped 0.7% compared with a forecasted 0.2% growth. Manufacturing production has been heading down for three consecutive months now.

• At the same time, a global deflationary spiral has hit Britain as well. The country’s consumer price index dropped to 1.8%, the lowest level since January 2017. As inflation receded, the country’s central bank is increasingly unlikely to raise interest rates.

• U.S. inflation dropped to 1.6% in January due to lower fuel prices, hitting a 19-month low. The decline came shortly after the Federal Reserve made a dramatic U-turn, strongly indicating it will not continue to raise interest rates.

• Crude oil inventories were up for the fourth consecutive week in the five-day period ended February 8, increasing by 3.6 million barrels. In the prior week, stockpiles were up by 1.3 million barrels.

• The Japanese economy grew by 0.3% in the final quarter of the year, or an annualized growth of 1.4%. The expansion comes after the GDP contracted in the previous quarter by an annualized 2.6%.

• Meanwhile, Germany reported no quarterly growth in the fourth quarter of 2018, showing that the largest European economy has been struggling of late. Year-over-year, the German economy rose by 0.9%.

• In the U.S., retail sales posted the largest drop in more than nine years in December, an indication of the economy’s weakness. The index collapsed 1.2% against expectations of 0.1% growth. Core retail sales declined more abruptly, down 1.8% compared with expectations of zero growth.

• Markets rallied again this week.

• Risk assets (SPHB B-) reclaimed the best performer’s crown this week, advancing 2.07%.

• Meanwhile, the broad market (SPY A) was the worst performer, jumping just 1.27%.

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• Major indexes were mixed.

• Small-cap stocks (IWM B+) was again the biggest performer with a gain of 2.57%. (IWM B+) rebounded the most in this year’s recovery, despite posting the biggest declines in the market rout at the end of 2018. Small-cap stocks have high leverage, and the Federal Reserve’s indication that it will refrain from raising interest rates further this year has improved investor sentiment.

• At the other end of the spectrum is emerging markets (EEM A-), which declined 0.80% for the week, due to falling commodity prices and weakness in the Chinese economy.

To see how these indices performed over the past year, check out ETF Scorecard: February 8 Edition

• Sectors posted mixed performance.

• Financials (XLF A) was the only decliner this week, down 0.38%, as investors dumped banking stocks following the Fed’s signal it will not raise interest rates. Banks benefit from rising interest rates because they can charge a higher interest rate spread.

• The telecom sector (XTL A) gained 4.63% this week, the biggest rise from the pack, as 5G gets closer to industrial implementation. An ongoing spat between the U.S. government and Huawei boosted U.S. telecom equipment providers.

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• Foreign equities were mixed.

• Brazil (EWZ B+) gained 1.96% this week, the best performance from the pack. Investors have been flocking to the country’s stocks ever since Jair Bolsonaro promised to make market-friendly changes, including pension reforms, tax reforms and a privatization plan.

• Russia (RSX B+), meanwhile, fell as much as 2.73% this week, as the prospect of fresh U.S. sanctions in relation to its meddling in U.S. elections spooked investors.

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• Commodities posted mixed performance.

• Crude oil (USO A) gained nearly 2% this week due to U.S. sanctions against Venezuela and Iran and OPEC supply cuts.

• At the same time, natural gas (UNG B-) lost more than 2% for the week, despite a harsh winter in certain parts of the U.S.

• The euro (FXE A) tumbled 2.73% in the past five days, as a string of negative economic data and Brexit concerns weighed negatively on the shared currency.

• The U.S. dollar (UUP A) is the king with a gain of 0.74%, despite the Federal Reserve’s pledge to keep interest rates at current levels for longer.

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Disclosure: No positions at time of writing.