Last Week:

March sends markets lower. Three of the major averages are now negative for the year through Q1.

Tech stocks were the reason. Yes, you can point to the Trump tariffs as part of the reason. But tech stocks, specifically Facebook, have caused a lot of the downturn as well. I think we are all familiar with Facebook’s privacy issues by now. That stock is now solidly below its 200-day moving average (a significant thing). And from my view that’s impacted the rest of the FANG stocks (Facebook, Amazon, Netflix, and Google). Add in Apple. No, those four stocks aren’t having the same difficulties as Facebook, but their charts are down in a similar fashion. Why is that important? Amazon, Apple and Google… just three stocks combined… represent 10% of the S&P500. When three super important stocks all go down in value together, it affects the rest of the market.

Don’t lose heart. Three reasons. First, corporate profits are good and expected to stay that way. Second, the 10-year rate hasn’t gone above 3.0% (currently at 2.74%). Third, the U.S. dollar remains stable.

We got the final read on the Q4 2017 U.S. GDP last week. It surprised… in a good way. The first read came in at +2.6%. The second read came in at +2.5%. The final read was expected to move upward to +2.7%. But it came in at +2.9%. Think about that: Q2 was +3.1%; Q3 was +3.2%; and Q4 was +2.9%. That means over the last three quarters we’re averaging over +3.0%. It’s been quite a long time since that’s happened. This is great news.

Did you know the same U.S. car purchased here, cost 30-35% more in Europe. First the EU slaps a 10% tariff (tax) on it. Then each country hits it with a VAT (value added tax). Germany’s is 19%. France’s in 20%. Italy’s is 22%. Norway’s and Sweden’s is 25%. So, a $30,000 U.S. car costs: $38,700 in Germany; $39,000 in France; $39,600 in Italy; and $40,500 in Norway and Sweden. What’s the current U.S. tariff for foreign vehicles? Just 2.5%. Does that sound like a level-playing field to you?


This Week:

The economic focus of the week: It will come on Friday morning when we get the latest jobs and unemployment numbers. Last month we got 313,000 new jobs. We’re only expecting 167,000 this month. The U3 unemployment rate is expected to drop from 4.1% down a tick to 4.0%.

Indicator focus: February’s construction spending, March’s ISM manufacturing index (Mon); March’s motor vehicle sales (Tue); February’s factory orders, March’s ADP employment report, ISM’s non-manufacturing index (Wed); February’s international trade (Thu); and March’s jobs and unemployment numbers (Fri).


Have a great week,

Chris

P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through Securities America, Inc., member FINRA/SIPC.  Advisory services offered through Securities America Advisors, Inc. Parker Wealth Management and Securities America not affiliated.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.   The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. Yahoo! Finance, the Wall Street Journal, Investor’s Business Daily and Barron’s are several of the sources used for financial information.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Consult your financial professional before making any investment decision. You cannot invest directly in an index.   Past performance does not guarantee future results. No strategy can assure a profit or protect against a loss. Investments in the securities markets involve risk, such as loss of your principal.