Weekly Market Commentary April 24, 2017

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In the thick of earnings season, markets swayed with a flurry of mixed reports from banks and industrials. For the week, the S&P 500 climbed 0.9%. The MSCI All Country World Index (ACWI), which includes U.S. and international stock markets, rose 0.6%, and the Bloomberg U.S. Aggregate Bond Index was unchanged. After a recent rally, oil fell sharply, dropping 7% last week.

Economic and policy news was generally positive. The International Monetary Fund (IMF) raised its forecast for global growth to 3.5%, which would be the fastest growth rate in the last five years. Also, comments from Treasury Secretary Mnuchin that tax reform will be passed by the end of the year ignited hopes of improved future growth.

On the other side of the Atlantic, politics continued to be the main driver for the markets. French voters advanced centrist Macron and populist Le Pen to the second round. Earlier last week, British Prime Minister May called for a general election on June 8 in hopes of garnering a larger majority to better execute her plans for Brexit.

What are we reading?

Below are some areas of the market we paid particularly close attention to this week. For further information, we encourage our readers to follow the links:

IMF Boosts Global Growth Forecast to 3.5% Despite Geopolitical Angst

The IMF edged its world growth forecast up a tenth of percentage point to 3.5%. Growth in cross-border trade is projected to grow to 3.8% and inflation is expected to be 2.0%. The trade and inflation data are roughly twice last year’s levels and indicate the global economy continues to heal.

U.K. Snap Election – Can We Hope For A Softer Brexit Now?

Members of Parliament overwhelmingly backed Prime Minister May’s plan for a general election on June 8. PM May is hoping to gain majority to ward off opposition parties that have been trying to thwart her efforts to leave the E.U.

U.S. tax reform coming soon, Treasury Sec. Mnuchin says

Treasury secretary Mnuchin reiterated that they are developing a sweeping plan to overhaul both corporate and individual taxes. Tax reform is seen as a potential source of increased economic growth through higher spending and increased rates of investment.

French Presidential Runoff Heralds New Political Era

Emmanuel Macron and Marine Le Pen moved on to the second round of the French presidential election. Macron, a centrist candidate who supports the European Union (EU), is expected to defeat the anti-EU Le Pen.

Fun Story of the Week

Back in the 1970’s and 80’s, going to an arcade was a luxury for any kid who was lucky enough to try his/her luck at legendary games like Galaga, Pac Man and Dig Dug. While many of the games that were popular have now become irrelevant, the often-overlooked pastime of pinball is still alive and thriving.

After falling out of favor during the latter half of the 20th century, pinball machines have become a collector’s item in a niche group. To comment on the immense fan dedication to pinball, Nate Shivers of the Coast 2 Coast Pinball podcast stated that, “The game makes grown men do crazy things.” In 2011, pinball legend John Popadiuk decided to build a limited run of his “mythological” machines, costing each of the twenty funders $16,000. Some consumers seem more than willing to write a blank check to relive key elements of their childhood.



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Market Commentary: Concerns About New Covid Variant Pushed Markets Lower; Core Inflation Rose 0.4%

Concerns about the Omicron variant raised the risk of additional lockdowns and contributed to a decline of more than 2% in the S&P 500 on the day after Thanksgiving. The COVID-19 variant, first detected in South Africa, triggered travel restrictions in the U.S. and Europe.

Market Commentary: Retail Sales Rise as Supply Chain Issues Ease Ahead of Christmas Season

U.S. retail sales surprised economists, rising 1.7% in October (Figure 1). Rising prices contributed 1% to the growth, and increased purchases generated the remaining 0.7%. Both the top-line and after-inflation rates were higher than pre-pandemic levels. Supply chain risks may have prompted …

Market Commentary: Inflation Surges in October, and a Record 3% of Workforce Voluntarily Quitting

An inflation surprise created a challenge for investors. The Consumer Price Index rose 0.9% last month. The monthly increase was the largest reached in 2021, and the yearly increase of 6.2% was the largest since 1990, when the Gulf War contributed to a surge in oil prices (Figure 1).

Market Commentary: Strong Earnings and Employment Report Bring Good News for the U.S. Economy

After a couple weak monthly reports, U.S. employment roared back in October. The U.S. created 531,000 new jobs, beating expectations for 412,500. August and September were both revised higher by more than 100,000 jobs. Private payroll increased 604,000 while government payrolls shrank 73,00 …
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