Markets dropped last week as concerns about inflation and trade disputes pushed stocks lower. Additional concerns about the government regulating technology companies pushed that sector down 2.8%. The S&P 500 slid 1%. The MSCI ACWI dropped 1.9%, and the Bloomberg BarCap Aggregate Bond Index dropped 0.4%.
Key points for the week
- Stocks dropped on concerns about technology regulation, wage inflation, and trade disputes.
- The U.S. jobs reports showed continued strong jobs growth and the highest wage gains since 2009.
- The trade dispute with China escalated as President Trump announced another $267 billion in sanctions are “ready to go.”
Economics
August’s jobs report was released last week displaying strong U.S. job growth with 201,000 jobs added and unemployment staying at a low 3.9%. As stated in previous weekly commentaries, we have been watching wage growth closely as it is a major contributing factor to higher inflation. The jobs report showed year-over-year wage growth of 2.9%, the highest rate since 2009. While that is strong, it is not as high as past economic expansions. However, the strong data raised our expectations the Federal Reserve will hike rates in September and December.
Trade
President Trump stated last week that tariffs on $267 billion worth of Chinese goods is “ready to go.” This would be on top of the $200 billion in Chinese goods already targeted. If all comes to fruition, more than $500 billion of Chinese goods would be affected by tariffs. The U.S. made progress in renegotiating trade deals with Europe, Mexico, and Canada, which allows a more united front to be presented to the Chinese when seeking to resolve ownership rules and the forced transfer of technology.
Fun Story
Lion climbs into safari vehicle in Crimea
History doesn’t always repeat itself but in this case, it did. Sort of. Just like Russia’s takeover of Crimea from Ukraine, a lion recently took over a safari tour bus. A safari park in Crimea was giving a tour in an open-air safari vehicle when a lion decided to hop in and cuddle the passengers. It must have been pretty tame. Luckily, the driver is known as the “lion whisperer” and appeared to have the situation under control.
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 any other named entity 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 without 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.
https://www.cnbc.com/2018/09/07/heres-where-the-jobs-are-in-one-chart-august-2018.html