Weekly Market Commentary April 22, 2019

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It was a quiet week for investors, as none of the three major indexes we track moved significantly. The S&P 500 eased 0.1% lower during the holiday-shortened trading week. The MSCI ACWI ticked 0.1% higher as both developed and emerging markets posted positive results. The Bloomberg BarCap Aggregate Bond Index rose 0.1%.

Key Points for the Week

  • Retail sales increased and pushed first quarter economic growth estimates higher.
  • Chinese economic data also continue to improve.
  • Corporate earnings were solid as earnings season continues.

The U.S. economy received some good news as retail sales rose 1.6% compared to last month. Through last Thursday, 15% of the S&P 500 had reported and more than three-quarters of the firms had beat earnings estimates. More companies will report this week. China reported 6.4% GDP growth in the first quarter, bolstering hopes of a recovery in Asia.


Economic Revival

Concerns about a global recession continue to decline as key economic data show signs of strength and revival. The U.S. and China have the world’s two largest economies, and both received positive economic news.

The U.S. consumer has been a source of strength during this long period of economic growth; but in recent months, retail sales have shown some weakness. Last week, the Commerce Department reported retail sales rose a robust 1.6% in March, beating estimates of 1%. The report showed strength in nearly every economic category and provided evidence the U.S. consumer remains strong.

China also received some good news. China’s GDP rose 6.4% in the first quarter, beating expectations of 6.3% growth. As the chart shows, much of the growth was attributed to a surge in industrial production. Retail sales also bounced back after a series of declines had raised concerns the Chinese consumer was becoming wary.

China’s higher level of growth also provided evidence the combination of government stimulus and renewed optimism on trade is boosting the economy. China has taken steps to make borrowing easier, encouraged construction, and cut taxes in order to keep its economy from tailing off further. The positive tone on trade negotiations between the U.S. and China has also encouraged economic activity.

The economic improvements in the U.S. and China provide support for continued global growth. The good news won’t last forever, but it does push the risks of a downturn a few more months down the road.

Fun Story

College kids are living like kings in Vancouver’s empty mansions

I don’t know about you, but when I was in college, luxury was not the adjective I’d use to describe my living situation. In Vancouver, however, college students are able to rent out mansions for dirt cheap. The reason is Vancouver’s mansion owners are trying to avoid a new tax on empty houses that was implemented to bring expensive housing prices down.


 

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