Last Week:

Jobs data and tariff threats send markets lower.

The March jobs data really disappointed. February (last month) was revised up from 313,000 up to 326,000. The range for the March numbers was 112,000 – 225,000. The number came in at 103,000. Yuck. But Q1 jobs averaged 202,000/month… which is good.

The U3 unemployment rate remained at 4.1% in March. Wages, year-over-year are up +2.7%.

Looking back… this past Wednesday was an important day. You’ve heard me discuss “support and resistance” before. Floors and ceilings if you will. Seven of the last ten days in the market the S&P500 has been below its 200-day moving average intra-day. Two of the last ten the S&P has closed below the 200-day. Last Wednesday morning the S&P broke way below the 200-day and it looked like it would only get worse. Shortly after the open the S&P was down -40 (the Dow was -510). But it finished up +35 (the Dow was up +231). A 75 point intra-day swing in the S&P (the Dow’s was 741 points). Importantly the S&P finished a good bit above the 200-day last Wednesday. Thursday was even better before Friday’s losses. We’re still above the 200-day overall in the S&P. Good news for now.

Tariff “chicken”… part one. China has been cheating and taking it to us on trade for decades. Donald Trump campaigned on fair trade and said he would change this situation where former Presidents were not able to. In 2017 the trade imbalance with China was about $-350 billion.

Tariff “chicken”… part two. So, what’s happened in 2018? 1) On Jan 22 the U.S. imposed tariffs on solar panels and washing machines: primary targets are China and South Korea. 2) On Feb 16 President Trump announces possible 25% tariffs on steel and 10% tariffs on aluminum: the primary target is China (largest global steel maker). 3) On Mar 7 the European Union threatens their own tariffs against our country if the U.S. moves ahead with the steel and aluminum tariffs. 4) On Mar 8 the U.S. imposed the steel and aluminum tariffs, but we grant exemptions to Canada and Mexico. 5) On Mar 22 Trump announced intensions to target $50 billion of annual tariffs on Chinese goods. We granted steel and aluminum exemptions to the EU and South Korea. 6) On Mar 22 (same day) China announced tariffs of $3 billion on U.S. goods. 7) On April 2 China imposed up to 25% tariffs on 128 U.S. products (wine, pork and pipe). 8) On April 3 the U.S. formalized the $50 billion of tariffs on Chinese goods (flat screen TV’s, medical devices, aircraft parts, and batteries). 9) On April 4 China announced $50 billion of tariffs on U.S. soybeans, cars and chemicals. 8) On April 5 Trump responds saying there might be another $100 billion of new tariffs on Chinese goods. I’m sure the saber rattling will continue… but to what degree?

The ISM manufacturing index for March came in close to expectations. February’s 60.8 was a 14-year high. March came in at 59.3. It was a good Q1. The 10-year average has been at 52.8.

The trade deficit was larger than expected, coming in at $57.6 billion. The good news: total trade was up $7.9 billion in February (exports were up $3.5 billion. Imports were up $4.4 billion). The bad news: the trade deficit is near a 9.5 year high.

Factory orders were up +1.2% in February.

This Week:

The economic focus of the week #1: Will the S&P’s “support” hold above the 200-day moving average?

The economic focus of the week #2: It will come on Wednesday afternoon when the latest Fed minutes are released. We already know what the statement was and that the Fed raised their interest rate 0.25%. But now we get the details or specifics of the meeting.

Corporate earnings are ready to begin for Q1. Here are some of the companies who are reporting this week: Bed Bath & Beyond, BlackRock, CitiGroup, JPMorgan Chase, Rite Aid, and Wells Fargo.

Indicator focus: March’s producer price index (Tue); March’s consumer price index, the March FOMC Fed minutes (Wed); and April’s preliminary consumer sentiment report (Fri).

Have a great week,


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