Weekly Market Review - January 8, 2018

Chad Hassinger |

By Bradley J. Rathe
Chief Investment Officer

January 8, 2018

"Be at war with your vices, at peace with your neighbors, and let every new year find you a better a man." Benjamin Franklin

Weekly look back:
  1. US Jobs came in below expectations however wage inflation was strong at a 2.5% annualized rate. Inflation is the biggest question mark as we go into 2018 and most of it rests on wage growth as it will have the biggest impact on future inflation.
  2. FOMC Minutes reflected a 7-2 vote on the most recent rate rise. Lack of inflation was a concern for the members that voted against the rate rise. Those in favor mentioned low unemployment and the impending tax bill as a reason for three more rate rises in 2018.
  3. ISM manufacturing was at a 14 year high for new orders reflecting strength in the future for manufacturing. ISM services was a bit disappointing coming in at 55.9 versus 57.6 expected.
Weekly look ahead:
  1. Producer Inflation numbers this week. Producer inflation has been running at 2.4% above the 2.0% target of the Federal Reserve and if this stays strong should keep them on track to continue to raise rates in 2018.
  2. Retail Sales during the holidays were strong. With high consumer confidence and reasonable wage growth we expect retail sales to continue at a modest pace..
  3. Inventories normally will rise, compared to sales, as businesses are confident. Additionally, when economic conditions start to deteriorate inventories will become a drag on the economy as sales fall.
World Macro highlights for this week: 

Wednesday: Import and Export Prices, Wholesale Trade
Thursday: PPI, ECB Minutes,
Friday: Retail Sales, Business Inventories

Graph Of The Week

Retail sales are running at the highest level in the past several years. Holiday sales were strong as wages are starting to pick up.

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.