Weekly Market Review - August 29, 2018

Chad Hassinger |
Categories
Tax Planning

By Bradley J. Rathe, AIF®
Chief Investment Officer

August 29, 2018

"I like to listen. I have learned a great deal from listening carefully. Most people never listen." Ernest Hemingway

Weekly look back:
  1. Durable Goods bewildered the market with a headline capital goods number of -1.7%.  However the details of the report were more in line with reasonable ongoing growth expectations.
  2. Housing has been a drag on the economy in 2018.  Headwinds include low inventory and rising US interest rates with the average 30 year mortgage now at 4.35%.
  3. FOMC minutes gave indication for another rate rise at the next meeting in September.  President Trump has publicly made comments about his disappointment for the ongoing rate rises.  Rarely have we seen a sitting president make comments on direction of monetary policy.
Weekly look ahead:
  1. GDP is expected to stay elevated at 4% for second reading of Q2.  The inflation component of GDP is the GDP price index and it should show sound reason for 2 more rate rises in 2018.
  2. Personal spending is the predominant part of the economy and is expected to have strong growth.  PCE price index is the favored inflation indicator of the Fed and is expected to increase by 2.3%.
  3. Sentiment seems to have peaked six months ago, similar timing to when tariff talks started.  Until we get some sort of resolution on trade tariffs sentiment will be capped.
World Macro highlights for this week: 

Wednesday: GDP, Corporate Profits, Pending Home Sales
Thursday: Personal Income and Outlays
Friday: Chicago PMI, Consumer Sentiment

2018 Yearly Index Returns as of 8/24/2018

S&P 500 

8.69%

Europe Equity

-2.52%

Emerging Equity

-7.36%

US 10 Yr

+.42 bp

US Small Cap Stocks

13.22%

 

Graph Of The Week


We have a few key inflation readings this week.  Most of the readings support the Fed's decision to raise rates and are above the 2% goal.

 

Unless otherwise expressly indicated, the opinions or views expressed in this article are the author's own and do not reflect, and may differ from, the opinions or views of Strategic Financial Group, LLC or others within Strategic Financial Group, LLC, including its officers, managers, owners, employees or other service providers.