It was a volatile week with a large dip on Wednesday followed by a sharp rally on Thursday and further gains on Friday, leaving market indices mixed. Value stocks outperformed growth stocks while developed foreign stocks and emerging markets indices were lower. Fears of an economic meltdown in Turkey and concerns over upcoming tariffs on China affected trading sentiment. The rally on Thursday was largely due to China agreeing to talk to the U.S. after two months of no dialog and to a lesser degree due to corporate earnings news. Treasury bond yields were largely unchanged and the U.S. dollar ended lower against a basket of currencies. Crude oil prices ended the week lower and grain prices were higher.
In the numbers this week:
- China reported
- Unemployment rose from 4.8% in June to 5.1% in July.
- The growth of fixed-asset investment fell to 5.5%, the lowest since 1999.
- Germany’s economy accelerated in the 2nd quarter growing at a 1.8% annual rate while the first quarter’s growth rate was revised up to a 1.5% annual rate.
- The Federal Reserve reported that industrial production rose 0.1% in July from June. The volatile mining sector which includes volatile oil and gas fell 0.3%. June’s increase was revised up to 1.0%. From a year ago, industrial production has risen 4.2% in July.
- The Federal Reserve Bank of New York reported that household debt is now at $13.3 trillion. Household debt bottomed in 2013 following the financial crisis and has risen gradually since then for 16 consecutive quarters.
- The Commerce Department reported
- Retail sales rose 0.5% in July and 6.4% from a year ago.
- Housing starts rose 0.9% in July, a slight rebound after a 12.9% drop in June. For the first seven months of 2018 housing starts have risen 6.2%. Weather was attributed to the weaker numbers.
- Home building permits, an indicator of future housing starts rose 1.9% in July.
- The Labor department reported
- Nonfarm worker productivity rose at a 2.9% annual rate in the 2nd quarter. However, from a year ago productivity rose only 1.3%. Productivity gains are important to provide wage increases without adding to price inflation.
- Unit labor costs decreased 0.9% in the second quarter but are up 1.9% from a year earlier.
- The consumer-price index rose 0.2% in July. Core prices, excluding volatile food and energy, consumer prices rose 0.2% also. From a year earlier consumer prices have risen 2.9% and core prices 2.4%.
- First time claims for unemployment fell 2,000 at a seasonally adjusted 212,000. The four week moving average of claims rose 1000 to a seasonally adjusted 215,500.
- The Energy Information Administration weekly report is here wpsrsummary. Also the EIA reported
- U.S. Crude oil production increased from 10.8MM barrels per day to 10.9MM barrels per day.
- Storage of natural gas rose 33BN cubic feet. Natural gas storage is below the minimum for this date during the past five years.
- According to Baker Hughes, In the past week the number of active oil and gas rigs were both unchanged.
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.