Weekly Market Review - May 8, 2018

Weekly Market Review - May 8, 2018

by Chad Hassinger on May 8, 2018

Finance

By Bradley J. Rathe
Chief Investment Officer

"A bit of fragrance clings to the hand that gives flowers." -Chinese Proverb

Weekly look back:
  1. The Federal Reserve did not raise rates last week as expected.  The next meeting in June is expected to bring the second rate rise for 2018 and still another later in the year to make three.
  2. Earnings have beaten on average by 7.4% and 76% of the companies have beaten on the bottom line estimates.  EPS growth has been 25% with 86% of the S&P 500 companies already reporting 2018 Q1 earnings.  However, the good earnings news has not been rewarded with higher prices so far this earnings season.
  3. US Unemployment rate came in under 4% for the first time this cycle.  Overall payrolls reported a bit light but so were hourly earnings.  We are back to a goldilocks economy, not too hot not too cold.
Weekly look ahead:
  1. Inflation concerns have decreased over the past few weeks as international growth has come into question.  This week's inflations readings of both consumer and producer will reinforce a moderate pace to inflation and will keep the Fed from raising rates too quickly.
  2. Sentiment continues to be elevated as companies continue to report good earnings.
  3. Dollar strength has surprised many the past few weeks as US growth seems intact whereas Europe and EM economies are wading through slower growth ahead.  Bank of England is expected to have no rate rise later in the week but it will central to see what their outlook is for the UK economy.
World Macro highlights for this week: 

Wednesday: PPI (Producer Inflation)
Thursday: CPI (Consumer Inflation), Bank of England Announcement
Friday: Consumer Sentiment, Import and Export Prices

2018 Yearly Index Returns as of 5/4/2018

S&P 500 

0.08%

Europe Equity

2.38%

Emerging Equity

-1.36%

US 10 Yr

+.55 bp

US Small Cap Stocks

1.70%

 

Graph Of The Week

Sentiment is a large driver of US economic growth. We continue to see high levels of optimism based upon these numbers.

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