U.S. stocks were modestly higher this week with foreign stocks logging larger gains. The U.S. Commonwealth of Puerto Rico filed for bankruptcy. At $73BN this municipal bankruptcy is much larger than Detroit’s $18BN was. On Wednesday, the FED expectedly left rates the same but stated than the recent softness in growth appears temporary leaving the possibility of a June rate hike on the table. On Friday, the April jobs number showed a sharp rebound in hiring from March. Treasury yields ended higher and the dollar finished slightly lower for the week. Oil prices continued to decline this week despite some firming on Friday. Corporate earnings came in very strong this week.
In the numbers this week:
- There were reports of manufacturing and services activity from around the globe:
- China’s manufacturing purchasing managers index fell to 51.2 in April from a five year high of 51.8 in March.
- China’s services purchasing managers index fell to 54.0 from 55.1.
- The Institute for Supply Management reported that the index of U.S. manufacturing activity fell to 54.8 in April from 57.2 in March.
- The ISM services index of non-manufacturing activity rose to 57.5 in April from 55.2 in March.
- The Commerce Department reported:
- Personal consumption rose 0.3% in March after inflation.
- Personal income rose 0.2% in March.
- The price index for personal consumption (the FED’s preferred measure of inflation) fell 0.2% in March and is up 1.8% from a year ago. Excluding volatile food and energy prices fell 0.1% and are up 1.6% from a year ago.
- Both imports and exports rose 7.1% in the first quarter. Since imports are larger than exports, the trade gap grew by 7.5%.
- Autodata reported that U.S. vehicle sales fell 4.7% in April versus last April. This April had one less selling day than last April.
- The Labor Department reported
- First time claims for unemployment fell 19,000 to a seasonally adjusted 238,000 in the prior week. The four-week moving average of claims rose 750 to 243,000.
- Productivity declined at an annual rate of 0.6% in the first quarter and unit labor costs rose 3%. Productivity tends to be weaker during periods of hiring as new hires are generally less productive than experienced workers but can also be weak during sharp downturns if production falls faster than layoffs. Never the less, productivity growth has been weak since the turn of the century and has created slow growth after inflation on household income.
- Hiring rebounded in April with the U.S. adding 211,000 nonfarm jobs. This follows a revised increase in March of only 79,000 jobs
- Average hourly earnings rose 2.5% in April from last April.
- The unemployment rate declined to 4.4% in April from 4.5% in March.
- The Energy Information Administration’s Weekly Petroleum Data report is here wpsrsummary (11).
- The Energy Information Administration reported
- Weekly field production of crude oil increased 28,000 barrels per day in the prior week.
- Natural gas in storage rose 67 Bcf from the prior week.
- Baker Hughes reported that oil drilling rigs rose 6 to 704. Gas drilling rigs rose 2 to 173.
- Factset reported that with 83% of the S&P companies reporting earnings the blended earnings increase for the first quarter is 13.5%.
Loren C. Rex, CFP®, AIF®, MA Erik 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.