Weekly Market Review - June 5, 2018

Weekly Market Review - June 5, 2018

by Chad Hassinger on Jun 5, 2018

Finance

By Bradley J. Rathe
Chief Investment Officer

"Trade isn't about goods. Trade is about information. Goods sit in the warehouse until information moves them." C.J. Cherryh

Weekly look back:
  1. We had a very strong jobs number this past Friday.  Payrolls advanced by 223k above the 190k expected and the Unemployment rate dropped to 3.8%.  The focus of the report was on wage growth and hourly earnings grew by a stronger than anticipated .3%.
  2. US GDP grew by only 2.2%, a bit lower than projected. Housing was strong in the report but as we have been talking, weak consumer spending continues to be a drag on the economy.
  3. Manufacturing growth is central to the Trump administration policy direction.  New manufacturing orders and the backlog reported extremely strong numbers last week so future growth looks bright.
Weekly look ahead:
  1. International Trade is released this week.  All the talk about China, Tariffs on Steal and Aluminum and NAFTA hope to bring down the trade deficit which has been growing for more than 50 years.
  2. The Services part of the economy has been a bright spot for many years. The past few months ISM Services has shown a decrease, however this month it is expected to bounce higher. 
  3. Many have commented on the lack of wage growth for the current recovery.  The central theme for the growth of the economy is not wage growth but productivity growth which is the relationship between compensation and output.
World Macro highlights for this week: 

Tuesday: ISM Non-Mfg, PMI Services
Wednesday: US Productivity and Costs, International Trade
Thursday: Consumer Credit

2018 Yearly Index Returns as of 5/18/2018

S&P 500 

2.96%

Europe Equity

-1.58%

Emerging Equity

-1.56%

US 10 Yr

+.49 bp

US Small Cap Stocks

7.72%

 

Graph Of The Week

The trade balance has posted a deficit since the 1980's. A smaller deficit adds to growth, while a larger deficit decreases GDP growth.

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