U.S. Stocks rose this week on good earnings. Also, the FED minutes reflected a positive outlook for the economy the rest of this year. Foreign stocks were relatively unchanged as were U.S. Treasury yields. Oil led commodities lower despite OPEC and non-OPEC producers extending their production cuts through March 2018. Traders had hoped for a bigger cut to drain inventories quicker as U.S. shale production has expanded rapidly. Trump’s proposed budget calls for reducing the Strategic Petroleum Reserve by half over 10 years. The reserve was created in response to the 1975 Arab oil embargo but has become less relevant due to increased U.S. production and shale reserves. It is estimated when this would start to be less than 100,000 barrels per day. The reserve is required by law to keep at least a 90-day supply of oil.
The dollar finished the week slightly higher. China’s debt was downgraded by Moody’s signaling a concern over rapidly expanding debt, especially corporate debt. Still China’s debt is still considered investment grade.
In the numbers this week:
- The Labor Department reported that first time claims for unemployment rose 1,000 to a seasonally adjusted 234,000. The four week moving average of claims fell 5,750 to 235,250 its lowest level since April 1973 when the workforce was much smaller.
- The National Association of Realtors reported that existing home sales fell 2.3% in April from March’s revised rate was the highest in 10 years. Lack of supply was attributed to April’s decline.
- The Eurozone reported its largest ever trade surplus as exports in March were 13% above a year ago.
- The Energy Information Administration’s Weekly Petroleum Data report is here: wpsrsummary (13)
- The Energy Information Administration reported
- Weekly field production of crude oil fell 15,000 barrels per day in the prior week.
- Natural gas in storage rose 75 Bcf from the prior week.
- Baker Hughes reported that oil drilling rigs increased by 2 to 722. Gas drilling rigs rose 5 to 185.
- IHS Markit reported that it’s purchasing managers index for the eurozone was unchanged at 56.8 in May. Anything over 50 represents acceleration.
- The Commerce Department reported
- New home sales fell 11.4% in April. New home sales makeup a small portion of total home sales and is highly volatile from month to month.
- The second estimate of first quarter gross domestic product was revised from 0.7% to 1.2%. The revisions were due to stronger consumer and business spending and a smaller reduction in government spending. I’d point out that the first quarter saw a 1% decrease in inventories which is usually bullish as these may get restored in future quarters.
- Factset reported that with 98% of the S&P companies reporting, the blended earnings growth rate for the first quarter of 2017 is 13.9% above the first quarter of 2016.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik Smith
Generations Financial Planning & Wealth Management 269-441-4143
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Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
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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.