U.S. stocks had modest losses this past week with foreign developed stocks having sharper losses.
Congress passed a bipartisan bill to roll back some aspects of the Dodd-Frank legislation from the financial crisis. The bill loosens some rules for smaller banks but keeps in place many of the oversight provisions in the 2010 law for larger institutions. The Fed released the minutes from their last meeting.
The FED is expected to hike rates another quarter percent in June but indicated it is willing to let inflation run a bit hot for a while since we’ve been below its 2% target for so long. The dovish comments from the FED caused the 10-year treasury yield to fall from 3.06% at the end of the prior week to 2.93%.
The dollar rose mainly due to weakness in the euro due to softening economic growth in Europe and political uncertainly in Italy.
Oil prices fell based on discussion amongst OPEC members about raising production caps due to falling production in Venezuela and the prospect of renewed sanctions on Iran. Never the less, I believe that Saudi Arabia will want to maintain a Brent price of $80 due to the initial public offering next year of Saudi Aramco. Yes, caps may be raised, but will likely be done in a slower phased in approach to maintain a Brent crude price of $80 with a lower price for U.S. Crude. We will see when OPEC meets in June.
In the numbers this week:
- The Federal Reserve reported that student loan delinquencies fell significantly over the past year with most other loan type delinquencies little changed.
- The Federal Housing Finance Agency reported that single-family home prices rose 6.9% in the first quarter of 2018 from the first quarter of 2017, the biggest year over increase since 2006.
- IHS Markit reported that its Purchasing Managers Index fell to 54.1 in May from 55.1 in April. This is the fourth straight monthly decline. However, anything over 50 represents expansion, albeit at a slower pace.
- Mexico’s gross domestic product grew 1.1% in the first quarter up from 0.9% in the fourth quarter. 1.1% is equivalent to a 4.6% annual rate.
- The Commerce Department reported
- Sales of new homes fell 1.5% in April.
- Durable goods orders fell 1.7% in April as civilian aircraft orders fell 29%. Given the volatile nature of aircraft orders from month to month if we look at the first four months of the year orders were up 9.6% from a year ago. In April non-defense durable goods orders excluding aircraft rose 1.0%. This is the best measure of business investment.
- The Labor department reported first time claims for unemployment rose 11,000 to a seasonally adjusted 234,000 in the prior week. The four week moving average of claims rose 6200 to 219,750.
- The Energy Information Administration weekly report is here wpsrsummary (10). Also the EIA reported:
- Weekly field production of crude oil rose 2 thousand barrels per day.
- Storage of Natural Gas rose 9BN cubic feet.
- According to Baker Hughes, In the past week the number of active oil rigs rose 15 to 859 and the number of active gas rigs fell 2 to 198.
- Factset reported that in the 1st quarter with 97% of S&P 500 companies reporting the blended earnings growth rate is 24.6% from a year ago.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.