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…
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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…
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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…
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The Worst Week of 2019
The first shoe dropped… Monday morning brought news that a trade deal with China was nearing, causing stocks to rally. However, given most investors believed a resolution to already be priced into the market, they took advantage of these elevated prices to cash in some of their gains, and this sell-off brought stocks right back down again. While the markets are already expecting a trade deal by the end of March, there is still a significant amount of uncertainty around the details and, therefore, true impact on the economy. Reaching a deal itself is important, but the bigger concern for the US (and others around the world) is going to be the…
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All the Things, All at Once
Growing, going, gone? GDP for the 4th quarter of 2018 increased 2.6%, which was higher than what the market was expecting. Consumer spending grew at 2.8%, which is significantly slower than the 3.5%+ pace we saw earlier this year (remember the horrible retail sales data for December?). Growth in business investment surprised the market to the upside, rising 6.2%, while residential investment declined for the 4th straight quarter (more on this later). And as predicted by the crystal ball of the Philly Fed’s survey last week, the ISM Manufacturing Index came in below expectations and fell 2.4 points in February driven by a decrease in new orders, employment, and production. However, while we continue to see signs building for…