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Weekly Economic Update _7.15.2019

In this week’s recap: the S&P 500 and Dow Jones Industrial Average close at historic peaks after bulls consider Capitol Hill testimony from Federal Reserve Chairman Jerome Powell; tame inflation persists.

Weekly Economic Update

July 15, 2019

 

THE WEEK ON WALL STREET

Friday, the S&P 500 settled above 3,000 for the first time, after rising 0.78% for the week. The Dow Jones Industrial Average chalked up a milestone of its own: the blue chips ended the week above 27,000, gaining 1.52% on the way. Additionally, the Nasdaq Composite wrapped up the week 1.01% higher. The MSCI EAFE index, a gauge of overseas developed markets, fell 0.65%.1-3

Stocks rallied at mid-week with help from Federal Reserve Chairman Jerome Powell’s congressional testimony on monetary policy, plus the latest Fed meeting minutes.

Jerome Powell’s Statements

Wednesday, Chairman Powell told Capitol Hill lawmakers that “uncertainties around global growth and trade continue to weigh on the outlook” of the Federal Open Market Committee. He also noted that “manufacturing, trade, and investment are weak all around the world.”4

On the same day, the Fed presented the minutes of its June policy meeting. The record shared the belief of some Fed officials that "a near-term cut in the target range for the federal funds rate could help cushion the effects of possible future adverse shocks to the economy.”4 

Overall Inflation Remains Muted

The June Consumer Price Index, released last week by the Bureau of Labor Statistics, measured only 1.6% yearly inflation. The Federal Reserve uses the Bureau of Economic Analysis’ Core Personal Consumption Expenditures (PCE) Price Index as its inflation barometer; in its latest edition, it showed just a 1.5% year-over-year rise.5

Currently, the Fed has a yearly inflation target of 2.0%. In the past, it has often raised interest rates in response to increasing inflation, which can potentially slow growth and affect hiring and employment levels. Absent significant inflation pressure, such a response may not be forthcoming.5

 

FINAL THOUGHT

All eyes are on corporate earnings this week, as prominent banks and about two dozen other S&P 500 firms report second-quarter results. Market participants have much to consider in terms of profits, revenue, and guidance.

 

T I P   O F   T H E   W E E K

Done wrong, a do-it-yourself estate strategy can lead to some tax management issues for your heirs. Other common problems include using documents inappropriate for your state or a power of attorney that your bank may challenge.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Fed chair Jerome Powell delivers a speech on monetary policy at the G7 summit in France, and the Census Bureau releases its June retail sales report.

Friday: The University of Michigan presents its preliminary July consumer sentiment index, measuring consumer confidence and perceptions of the economy.

Source: Econoday / MarketWatch Calendar, July 12, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Citigroup (C), J.B. Hunt (JBHT)

Tuesday: Goldman Sachs (GS), Johnson & Johnson (JNJ), JPMorgan Chase (JPM), Wells Fargo (WFC)

Wednesday: Bank of America (BAC), Netflix (NFLX), Novartis (NVS), Abbott Labs (ABT)

Thursday: Microsoft (MSFT), UnitedHealth (UNH)

Friday: American Express (AXP)

Source: Zacks, July 12, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

 

Q U O T E   O F   T H E   W E E K

“Be nice to people on your way up, because you’re going to meet them all on your way down.”

JIMMY DURANTE

 

T H E   W E E K L Y   R I D D L E

Marking mortal privation, when firmly in place. An enduring summation, inscribed on my face. What am I?

 

LAST WEEK’S RIDDLE: Pronounced as one letter, written with three, there are only two letters in me. I’m read from both ends, and the same either way. What word am I?

ANSWER: The word "eye."

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - cnbc.com/2019/07/12/stock-market-dow-futures-rise-after-fed-hints-at-rate-cut-ahead.html [7/12/19]

2 - wsj.com/market-data [7/12/19]

3 - quotes.wsj.com/index/XX/990300/historical-prices [7/12/19]

4 - investopedia.com/markets-cheer-lower-interest-rate-outlook-4692639 [7/10/19]

5 - reuters.com/article/us-usa-economy-inflation/u-s-core-cpi-posts-biggest-gain-in-nearly-1-1-2-years-idUSKCN1U61NR?il=0 [7/11/19]

 

CHART CITATIONS:

wsj.com/market-data [7/12/19]

quotes.wsj.com/index/SPX/historical-prices [7/12/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [7/12/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [7/12/19]

 

Weekly Economic Update _7.8.2019

In this week’s recap: stocks hit record peaks, then descend after the Friday release of the June jobs report; further tariffs are planned for European imports.

Weekly Economic Update

July 8, 2019

 

THE WEEK ON WALL STREET

U.S. stock benchmarks opened a new quarter positively. The S&P 500 gained 1.65% in the opening week of July; the Dow Jones Industrial Average, 1.21%; the Nasdaq Composite, 1.94%. Overseas, stocks in developed markets, tracked by MSCI’s EAFE index, rose 1.43%.1-4

On July 3, the S&P posted its latest record close: 2,995.82. On July 5, stocks fell, slightly, after the Department of Labor released its June employment report.5

 

Jobs Report Beats Expectations

Analysts polled by Bloomberg thought the economy would add 160,000 net new jobs in June. Instead, the number was 224,000. The headline unemployment rate ticked up 0.1% to 3.7%; the U-6 rate, including the underemployed, also rose 0.1% to 7.2%.6

Before the large June gain was announced, traders were confident that the Federal Reserve would adjust interest rates this summer. This latest hiring data called that confidence into question. 

 

More Tariffs Slated for European Goods

The federal government plans to levy new import taxes on $4 billion of food and beverages coming from the European Union, the Office of the U.S. Trade Representative said last week. This would complement the tariffs on $21 billion worth of E.U. imports announced in April.7 

The U.S. and E.U. generate more than $1 trillion in commerce through trade relationships. European exports to the U.S., however, far outweigh U.S. exports to the E.U.7

 

WHAT’s AHEAD

Monday, July 15 will mark the start of the next earnings season. Money-center banks report first, followed by companies from a variety of industries.

 

T I P   O F   T H E   W E E K
A good, small-business invoice ideally states five things: the timeframe the company gives the client to pay, whether the client is permitted to pay upfront, whether late fees can be charged, the kinds of payments accepted, and if delivery will occur before or after receipt of payment.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Federal Reserve Chairman Jerome Powell delivers opening remarks at a conference of the Federal Reserve Bank of Boston.

Wednesday: Fed Chair Powell testifies on monetary policy in Congress, and the Fed also releases the minutes from its June meeting.

Thursday: The June Consumer Price Index appears, showing monthly and yearly changes in inflation.

Source: Econoday / MarketWatch Calendar, July 5, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: PepsiCo (PEP)

Wednesday: Bed Bath & Beyond (BBBY)

Thursday: Delta Air Lines (DAL), Fastenal (FAST)

Source: Zacks.com, July 5, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

 

Q U O T E   O F   T H E   W E E K

“All our discontent at what we lack results from lack of gratitude for what we have.”

DANIEL DEFOE

 

T H E   W E E K L Y   R I D D L E

Pronounced as one letter, written with three, there are only two letters in me. I’m read from both ends, and the same either way. What word am I?

 

LAST WEEK’S RIDDLE: What is the difference between a schoolboy studying and a farmer watching his cattle?

ANSWER: One is stocking his mind, while the other is minding his stock.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - quotes.wsj.com/index/SPX/historical-prices [7/5/19]

2 - quotes.wsj.com/index/DJIA/historical-prices [7/5/19]

3 - quotes.wsj.com/index/COMP/historical-prices [7/5/19]

4 - quotes.wsj.com/index/XX/990300/historical-prices [7/5/19]

5 - marketwatch.com/story/sp-500-heads-for-3rd-straight-record-ahead-of-private-sector-jobs-report-2019-07-03 [7/3/19]

6 - fortune.com/2019/07/05/us-hiring-jobs-data-rebounds/ [7/5/19]\

7 - cnn.com/2019/07/02/economy/us-tariffs-on-eu/index.html [7/2/19]

 

CHART CITATIONS:

quotes.wsj.com/index/SPX/historical-prices [7/5/19]

quotes.wsj.com/index/DJIA/historical-prices [7/5/19]

quotes.wsj.com/index/COMP/historical-prices [7/5/19]

tradingview.com/markets/indices/quotes-us/ [7/5/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2019 [7/5/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [7/5/19]

 

Walter Barnes is a registered non-solicitor of, and David (Randy) Barnes is an investment adviser representative of, and securities and advisory services are offered through, USA Financial Securities Corp., Member FINRA/SIPC. www.finra.org A Registered Investment Adviser located at 6020 E Fulton St., Ada, MI 49301. Insurance and Investment Consultants, Inc. is not affiliated with USA Financial Securities.

David (Randy) Barnes is authorized to transact securities-related business and investment advisory services only in states where he is properly registered. For investment products and services these states include: AL; FL; KY; LA; NC; TN. For investment advisory services these states include: AL; KY; LA; MS. Clients who are not residents of these states cannot be serviced. This website is not intended to provide investment, legal, or tax advice, nor to effect securities transactions or to render personal advice for compensation.

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