• Sentiments Toward a Renewed Focus

    Jack of all trades… Trade drama has been making headlines for a while and things have escalated quickly over the last two weeks. We have had outstanding trade issues with various different major trade partners over the last few months. This week, Trump agreed to lift tariffs on metal imports from Canada and Mexico while postponing his decision to impose tariffs on automobiles from Japan, the European Union, and various other countries for six months. This leaves all the attention on China. Latest news on this front – these trade talks have come to a standstill. Oh good.  Moral of the story: Improving trade agreements was a large part of…

  • China, China, China

    One for you, one for you, one for everyone!  The latest Job Openings and Labor Turnover Survey (JOLTS) report showed we had 7.49 million job openings in March while there were only 5.8 million unemployed workers. This marks thirteen straight months where the number of job openings has exceeded the number of unemployed workers as companies are struggling to find the right type of people to fill these jobs. This is a massive opportunity that a previous stock pick (LRN) is addressing. Job openings saw big gains for transportation, warehousing, construction, and real estate while job openings fell slightly for the federal government.  Moral of the story: While the pace of hiring has slowed…

  • Magic Fountain Philosophies

    Solid & Steady  The Fed held its monthly policy meeting this week and decided to leave rates unchanged. Policy members pointed out that overall and core inflation have been recently declining (remember just last week we saw CPI decline to 1.7%) and running below the Fed’s 2% target even though the economy is growing at a steady rate. However, Fed officials believe this weakness in pricing will be “transient.” Moral of the story: Based on the upbeat commentary from the FOMC and their belief that inflation might return, the Fed effectively erased any hopes of a rate cut. Bad news is that markets were probably hoping to hear a tone…

  • LOL, JK

    LOL, JK. We got the initial read on first quarter GDP this week – while economists were forecasting a 2.3% growth rate, we actually saw GDP increase by 3.2% for the first quarter. What happened to all the data that was indicative of a slowdown in economic growth?! A surprise to the upside came from a 3.9% increase in local and state government spending, which had decreased by 1.3% in the fourth quarter. Two other factors that positively impacted GDP were increased inventories and trade. On the other hand, consumer spending only increased by 1.2%, which is the slowest rate of growth we’ve seen in a year, business fixed investment decelerated…

  • Rebounds & Earnings

    The March Continues into April The Philly Fed’s manufacturing index came in at 8.5 in April, falling from its March reading of 13.7 and coming in below economists’ expectations. This index was as high as 32.3 at the beginning of last year and has steadily marched downward. More notably, the future activity outlook fell to its lowest level since February 2016 (all this doesn’t make me feel too warm and fuzzy). Manufacturing has been a weakness in the economy lately driven by a stronger US dollar, weaker growth overseas (though Chinese economic data for first quarter came in ahead of expectations with an 8.5% jump in industrial production), and trade…

  • Inflation, where are you?

    Minutes Matter Remember the Fed meeting two weeks ago when they decided to keep interest rates unchanged and effectively hit pause on their tightening policies? We got to see the minutes from that meeting this week and their decision was driven by economic data indicating slower growth in the US, Brexit (the “will they, won’t they” drama continued this week with yet another extension), and of course can’t forget trade tensions with China. To my surprise, the FOMC also called out the lack of inflation in response to wage growth and pricing pressure from tariffs. While policy changes were indicative of a cautious stance toward the economy, some FOMC members refused to rule…

  • Buckle In

    Everyone’s Favorite Blame Game Manufacturing activity rebounded in March, with the ISM manufacturing index coming in at 55.3, ahead of the 54.2 print in February and economist estimates of 54.5. If you remember the Philly Fed Survey from a few weeks ago, it wasn’t clear what to expect from this report but most of the data pointed to stabilization of the manufacturing sector that’s been weakening since the fall last year. Components of the index were encouraging – new orders increased 1.9 points, production increased 1 point, and employment actually showed significant strength rising 5.2 points. The ISM services index, however, expanded at the slowest rate in 19 months, falling to 56.1 from 59.7…

  • The Inversion

    May Political Resolutions Trump all this Drama  The Mueller investigation against President Trump concluded that neither Trump nor his campaign conspired with the Russian government and Attorney General William Barr concluded the evidence wasn’t sufficient to establish that Trump committed a crime. While “Keep America Great” tweets from the White House flooded news cycles early this week, political drama was unfolding across the pond as the UK Parliament was considering Theresa May’s third Brexit vote, which was defeated on Friday. Apparently third time May not, in fact, be a charm. Britain was given until May 22 to leave the EU, but with the Brexit deal voted down, the new cut-off is April 12.  Moral…

  • Great Expectations (for Not So Great Growth)

    Accommodations  The Federal Reserve had its regular two-day meeting this week. The market was largely expecting the FOMC to keep policy unchanged but all eyes were on the economic outlook for this year. The Fed left policy rates unchanged and indicated no rate increases in 2019, which is lower than the two rate increases that were previously forecast. The Fed also expects to wind down the balance sheet reduction by September, which is sooner than the year-end timeline previously expected by the market.  Moral of the story: While this accommodative policy was the good news the market wanted to hear, it also comes in tandem with the Fed lowering its…

  • Wall Street’s Back (alright!)

    Finding the silver lining  After the dismal December retail sales report, investors have been awaiting the January numbers, which we saw on Monday this week. I’ll give you the bad news first. The December numbers were actually revised further downward to -1.6% (compared to the initial -1.2% number), which is the biggest drop in retail sales since September 2009 when we were clawing back from the GFC. Now the good news. Retail sales increased 0.2% in January, which is higher than expected, driven by sales for building materials and discretionary spending. Compared to January last year, retail sales actually increased 2.3%.  Moral of the story: January retail sales tend to be lower than those in December given…