
Weekly Market Review - August 9, 2018
By Bradley J. Rathe, AIF®
Chief Investment Officer
August 9, 2018
"The circulation of confidence is better than the circulation of money." James Madison
Weekly look back:
- Central Banks were in focus last week with the Federal Reserve not raising rates and the Bank of England (BOE) deciding to move up rates by .25%. The tightening cycle is gaining steam.
- The Jobs report headline number of 157k jobs was a bit weaker than expected, however the rest of the outlook looked like sustainable ongoing gains. Wages advanced (moving up .3%) and the unemployment rate fell to 3.9%.
- Both ISM Manufacturing and ISM Services (Non-Manufacturing) came in above estimates. Capacity stress is starting to be an issue and normally this leads to stronger inflation. Tariffs are the biggest concern going forward from manufacturers.
Weekly look ahead:
- Inflation will be a significant indicator to monitor. Producer Inflation (PPI) is expected to show gains as some of the Tariff news is filtering through to manufacturing. Consumer Inflation (CPI) is expected to stay muted as producers are struggling to pass on price increases.
- Consumer Sentiment is strong and is a key indicator of future economic growth.
- Consumer Credit is one of the main concerns economists have and the question out there is how much credit is too much. Last month credit grew two times as much as expected to $24 billion.
World Macro highlights for this week:
Wednesday: Producer Inflation (PPI)
Thursday: Consumer Inflation (CPI), Fed Balance Sheet
Friday: Consumer Sentiment, Import and Export Prices
2018 Yearly Index Returns as of 8/3/2018
S&P 500
7.20%
Europe Equity
-1.26%
Emerging Equity
-4.86%
US 10 Yr
+.54 bp
US Small Cap Stocks
9.79%
Graph Of The Week
Consumers certainly are not irrationally exuberant. They seem to be in a wait and see mode as Washington continues to work through trade deals.