U.S. stocks gained this week while foreign stocks declined. Concerns over tariffs weighed on foreign stocks as the Trump administration increased the proposed tariffs for an additional $200BN of Chinese imports from 10% to 25%. The proposed tariffs are anticipated to take affect by month’s end. China announced anticipated retaliatory tariffs on about $60BN of U.S. exports to China, which represent most of the remaining U.S. exports. China also indicated the tariff percentages will vary for different items. China is urging the U.S. to return to talks to curtail the escalating trade war.
The Federal Reserve met this week and left interest rates unchanged. It is anticipated that the FED will raise interest rates at the September meeting. The Bank of England also met and raised the short term interest rate from 0.5% to 0.75%,
The U.S. Dollar strengthened and the 10 year treasury bond yield rose above 3%. Commodities were lower for the week with gold having significant declines.
In the numbers this week:
- The Institute for Supply Management reported that manufacturing accelerated more slowly in July as it’s purchasing managers index fell from 60.2 to 58.1. Keep in mind that manufacturing is growing, just at a slower rate.
- The China Caixin Manufacturing purchasing managers index fell from 51.0 to 50.8.
- The Commerce Department reported:
- Personal-consumption expenditures rose 0.4% in the month of June. May’s personal consumption expenditures were revised up to 0.5%. While goods spending was flat in June, services spending rose 0.6%, mainly restaurants and accommodations, reflective of summer vacation spending.
- Personal income rose 0.4% in June.
- The personal-consumption expenditure price index rose 0.3% in June.
- The trade deficit rose in June 7.3% from May. Exports fell and imports rose. Year to date the trade deficit rose 7.2% from a year ago. The trade figures were likely exaggerated due to anticipated tariffs.
- The Labor department reported
- Hiring slowed in July as 157,000 non-farm jobs were created down from a revised 248,000 in June. May was also revised up to 268,000.
- The unemployment rate declined from 4.0% to 3.9%.
- Wages have risen 2.7% in July from a year ago.
- First time claims for unemployment rose 1,000 to a seasonally adjusted 218,000. The four week moving average of claims fell 3500 to a seasonally adjusted 214,500.
- The labor cost index rose 2.8% in June from a year prior.
- Factset reported with 81% of S&P 500 companies reporting earnings, the blended earnings growth rate in the 2nd quarter is 20.0%
- The Energy Information Administration weekly report is here: wpsrsummary Also the EIA reported
- U.S. Crude oil production declined from 11MM barrels per day to 10.9MM barrels per day.
- Storage of natural gas rose 35BN cubic feet putting natural gas storage below the minimum for this date during the past five years.
- According to Baker Hughes, In the past week the number of active oil rigs fell 2 to 859 and the number of active gas rigs fell 1 to 185.
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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
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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.