Weekly Market Review - January 2, 2018

Chad Hassinger |

By Bradley J. Rathe
Chief Investment Officer

January 2, 2018

"For last year's words belong to last year's language. And next year's words await another voice." T.S. Eliot

Weekly look back:
  1. Equity markets around the world ended the year on a strong note. The S&P 500 had positive total return in every month of the year in 2017 for the first time ever. We expect more volatility in 2018.
  2. Consumer confidence fell to end the year as people were concerned about future wage growth. Pessimists increased by 25% in the survey.
  3. Holiday retail sales jumped 4.9%, the strongest reading since 2011. The savings rate dropped to 2.9% the lowest reading in 10 years. Wage growth needs to move higher to sustain the expected 3% plus GDP growth in 2018.
Weekly look ahead:
  1. US Jobs report is expected to stay strong with 190k growth expected. Average hourly earnings, the lager of the report, is again expected to increase .3%. For the recovery to continue, a pick-up in wages is needed so the increase in consumer spending continues.
  2. Both ISM numbers this week, manufacturing and service, and expectations are for continued growth in services with moderation from manufacturing.
  3. FOMC minutes are reported this week. Janet Yellen, the previous chair is now handing the central banks reins to Jerome Powell. Expectations are for more of the same and 3 rate rises in 2018.
World Macro highlights for this week: 

Wednesday: ISM Manufacturing, Construction Spending, FOMC Minutes
Thursday: ADP employment report, PMI Services Index
Friday: US Jobs, Factory Orders, ISM Non-Manufacturing, International Trade

Graph Of The Week

The US Trade balance, Exports minus Imports, has widened to close to 50 billion. President Trump is working on many trade deals that will affect this number including Nafta negotiations.

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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.