Blog Post

The Past Week in the Markets

Stocks had sharp declines this week following an announcement on Thursday afternoon of tariffs on  the remaining $300BN of Chinese imports taking effect on September 1st.  Up until now, tariffs have not been placed on consumer goods but it remains to be seen what impact this will have on consumer spending when the prices of goods suddenly rise 10%.  On Wednesday, the Federal Reserve, as expected, cut short term rates .25%.  During the press conference, Charmian Powell said that the cut is not likely the beginning of a series of cuts and the markets reacted negatively.  The markets regained their footing Thursday morning and rallied prior to the tariff announcement.

In July, the economic expansion became the longest in U.S. history.  At this point the U.S. is continuing to create jobs each month and consumer spending and balance sheets remain strong.  Inflation remains well below the FED’s target.  It remains to be seen if the tariffs will actually go into effect September 1st and how long they will be in place or high they will go.

This past week saw the dollar decline against a basket of currencies and gold rose to $1457 an ounce.  Crude oil fell to $55.30 and the 10-year Treasury yield fell to 1.846%.

In the numbers this week:

  • The Institute for Supply Management reported that its U.S. manufacturing PMI fell from 51.7 in June to 51.2 in July.  Keep in mind that anything above 50 represents expansion, just at a slower rate of acceleration.
  • The S&P CoreLogic Case-Shiller home price index was up 3.4% in May from a year earlier, down from the 3.5% year over year increase in April.
    • The Commerce Department reported: Personal-consumption expenditures, a measure of household spending rose 0.3% in June.
    • Personal income rose 0.4% in June.
    • The price index for personal-consumption expenditures rose 0.12% in June.  This preferred measure of inflation for the Federal Reserve rose 1.4% from a year ago.  Excluding volatile food and energy prices were up 0.25% in June and 1.6% from a year earlier, well below the FED’s 2% target.
  • The Labor Department reported: The employment-cost index, which includes wages and benefits rose a seasonally adjusted 0.6% in the second quarter.  From a year earlier total compensation rose 2.7%.
    • First time claims for unemployment rose 8,000 to a seasonally adjusted 215,000 last week.  The four week moving average of claims, designed to smooth out weekly fluctuations, fell to 211,500.
    • The U.S. created 164,000 jobs in July.
    • The unemployment rate was unchanged at 3.7%.
    • Average hourly wages were up 3.2% from a year ago.
  • Factset reported that with 77% of the S&P500 companies reporting results, the blended earnings decline was 1.0%.
  • The Energy Information Administration weekly report is here wpsrsummary.  Also, the EIA reported in the prior week:
    • U.S. Crude oil production rose from 11.3MM barrels per day to 12.2M barrels per day.
    • Storage of natural gas rose 65BN cubic feet and is still below the past five year average for this time of year.
  • Baker Hughes reported in the past week that the number of active oil rigs fell 6 to 770 and the number of active gas rigs rose 2 to 171.

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Best Regards,

Loren C. Rex, CFP®, AIF®, MA                                                         Erik A Smith

President                                                                                                 Managing Partner

Generations Financial Planning & Wealth Management             269-441-4143

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Battle Creek, MI  49017

Tel 269-441-4090

Carrie Fuce, Assistant 269-441-4091

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Generations Financial Planning & Wealth Management – Financial Planning & Wealth Management services for Battle Creek, MI.

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Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.  Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.  Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.

These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.  The Indices mentioned are unmanaged and cannot be invested into directly.


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