The markets ended the week mixed with large company indexes higher and small company and emerging markets lower. The markets were swayed by the ebb and flow of news on trade. On Friday it was announced the tariffs on Mexican and Canadian aluminum and steel were being removed and automobile tariffs affecting Europe and Japan were being delayed for 180 days. However, markets faded on Friday following news that a date for the next round of talks with China could not be reached following the Trump administration ratcheting up scrutiny of Chinese telecom companies. Still we would point out that the impact of tariffs on the U.S. economy is only 0.3%. A potentially bigger risk is the market’s reaction to a breakdown in trade talks.
The week saw mixed economic news with April data showing a drop in retail sales and industrial production but a sharp rebound in housing starts and a drop in first time claims for unemployment. The 10-year treasury yield fell to 2.394% and the dollar rose against a basket of currencies. Crude oil rose on the week due to increased tensions in the middle east following sabotage to tankers and a drone attack on a Saudi pipeline.
In the numbers this week:
- The Commerce Department reported
- Retail sales fell 0.2% in April. Excluding volatile food and energy prices also fell 0.2%. This follows a 1.7% increase in March.
- Housing starts rose 5.7% in April. However, for the first four months of the year starts have fallen 7.2%. Lack of available land and increased costs were cited as limitations.
- Building permits, a measure of future housing starts, rose 0.6%.
- The Federal Reserve reported that industrial production fell 0.5% in April. Manufacturing, the largest portion of industrial production also fell 0.5%. Machinery, electrical appliances and motor vehicle production saw the largest declines.
- The Labor Department reported
- First time claims for fell from a seasonally adjusted 228,000 to 212,000. The four week moving average of claims increased 4,750 to 225,000.
- Import prices rose 0.2% in April. Excluding petroleum, import prices fell 0.6% with capital goods and “non-petroleum industrial supplies and materials,” seeing the biggest decline since 2009. The strong dollar was credited to the low numbers following larger increases in February and March.
- The Energy Information Administration weekly report is here: wpsrsummary. Also, the EIA reported in the prior week:
- U.S. Crude oil production fell from 12.2MM barrels per day to 12.1MM barrels per day.
- Storage of natural gas rose 106BN cubic feet.
- Baker Hughes reported in the past week that the number of active oil rigs fell 3 to 802 and the number of active gas rigs rose 2 to 185.
- Factset reported with 92% of S&P 500 companies reporting earnings, the blended earnings decline was -0.5% versus the 1st quarter last year. 76% of companies posted a positive earnings surprise and 59% reported a positive revenue surprise. 72 S&P500 companies reported negative guidance and 18 reported positive guidance.
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.