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:
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.
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.
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.
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.
This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of CWM, LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change with notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
S&P 500 INDEX
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
MSCI ACWI INDEX
The MSCI ACWI captures large and mid-cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries*. With 2,480 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index
The Bloomberg U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.