Market Commentary

Weekly Market Commentary August 13, 2018

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

Concerns over declines in the Turkish currency and the risk of a trade dispute between the U.S. and Turkey pushed stocks lower last week. Turkey and the U.S. are sparring over the jailing of a U.S. pastor by Turkey. The S&P 500 fell 0.2% for the week. Global stocks were more affected by the issues in Turkey as the MSCI ACWI dropped 0.7% higher. The Bloomberg BarCap Aggregate Bond Index rose 0.4%.


Key points for the week

  • Stocks dropped this week on concerns about the Turkish currency.
  • Inflation rose 2.9% in the last 12 months as tariffs increased prices of many goods.
  • The next leg higher in the S&P 500 will likely require a broader set of companies participating in the rally.

Source: https://www.cnbc.com/2018/08/10/us-cpi-july-2018.html


 

Economics

The U.S. Consumer Price Index was released for July showing a gain of 0.2% and an annual gain of 2.9%. The core CPI posted an annual gain of 2.4%, the largest year-over-year gain since 2008. The recent report strengthens the possibility of two more rate hikes before year’s end as the Fed’s target rate is 2%. Much of the gains in the CPI can be attributed to the rise in input costs as tariffs have raised prices of materials such as lumber, aluminum, and steel. This rise is exemplified in the shelter index as its annual rate is 3.5%. The chart above shows the monthly CPI rates over the last 12 months.


Fundamentals

As the S&P 500 closes in on the record it reached in late January, many are wondering what will push the index to break through. The number of companies participating in the rally will likely need to be expanded. The S&P 500’s gains this year have been concentrated in a few companies primarily associated with technology, internet retail, or social media. The strong earnings in the second quarter showed broad earnings growth and a higher-than-expect number of companies that beat estimates. For the market to go higher, those fundamentals need to be reflected in stock prices.


Fun Story

Nationwide Goat-on-the-Lam Trend

An odd event occurred last week in Hackettstown, New Jersey. 75 goats escaped a livestock auction and were running amuck in town. If this event wasn’t odd enough, it happened a week before in Boise, Idaho. One picture from Boise shows a home’s front lawn getting snacked on by nearly 30 goats. In the words of Lou Brown from the movie Major League, “If it happens a third time it’s called a streak.” Let’s hope it never reaches that point.


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.

 

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

Weekly Market Commentary July 31, 2017

Second quarter earnings have been anything but dull with a majority of the reporting companies beating internal estimates and market expectations. Consumer confidence jumped to a near 16-year high in July (121.1 vs 117.3 in June) amid optimism over the labor market. In spite of the news, th …

Weekly Market Commentary July 24, 2017

Earnings season is off to a good start with major indices up almost every day of the week. Additionally, the Bank of Japan’s decision to again push back the target date to reach its inflation goal and the ECB standing pat on stimulus pushed Asian and European exchanges higher. The S&P 5 …

Weekly Market Commentary July 17, 2017

Headline CPI for June came in at 1.6%, down from 1.9% the previous month. Fed’s chair Yellen reiterated her confidence about the U.S. economy, but noted that the committee, “…stands ready to adjust policy if it appears the inflation undershoot appears consistent.” The less hawkish tone sent …

Weekly Market Commentary July 10, 2017

Markets weathered additional indications that global interest rates are moving higher while the world’s most powerful leaders met at the G20 meeting in Hamburg. The S&P 500 rose 0.1% as the MSCI ACWI fell 0.2% and The Bloomberg BarCap US Aggregate Bond Index slid 0.4% because of the inc …
1 2 3 65 66 67 68 69 70 71
Market Commentary

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation