Markets react to possible tariffs. And it was pretty rocky until Friday. Are tariffs good or bad? I’m still listening. I’ve heard good points from both sides. Historically, they haven’t worked thus far. We only order 2-4% of our current need from China (but China currently produces 50% of the world’s steel). Do we want a steel and aluminum industry in our country? Are we afraid of Canada? So, where am I at? Generally I like the concept of free trade. But I’m not a free-trader that ignores the impact of decisions. NAFTA doesn’t seem to have helped American workers a whole lot. And it seems like its ok for other countries to put tariffs on our goods, but God forbid we try to make the playing field more equal. So, I’m still watching and listening.
Markets had a good Monday. Then the new Fed Chair Jerome Powell testified before Congress on Tuesday and Wednesday. Chairman Powell actually had good news to share: the economy is strong. Oh no… that means the Fed will continue to raise interest rates this year. Please remember their interest rate is only at 1.25%. We are still in “emergency” rate territory, and clearly our economy is not in an emergency status. The Fed’s Open Market Committee meets for the second time this year in two weeks.
The second reading for Q4 2017 GDP dropped a tick, coming in at +2.5%.
New homes sales dropped -7.8% in January. Sales are down -1.0% year-over-year.
Durable goods orders dropped -3.7 in January. Year-over-year orders are up +6.8%.
Interesting quote: “I would rather the Chinese own $1 trillion of U.S. government bonds, than have the U.S. own $1 trillion of Chinese government bonds.” — Economist Brian Wesbury
The economic focus of the week: Normally it would be the Jobs and unemployment numbers that will come out on Friday. But with President Trump’s announcement last week about possible steel and aluminum tariffs, the real question is: how will markets respond this week?
The Queen of Hearts contest remains a big center of attention in the Cleveland area. Only five cards are left. If the ticket that’s drawn for the right card number (either #28, 30, 45, 49 or 50) and has the Queen of Hearts behind it, it wins the jackpot. Last week the jackpot was $3.2 million. It’s likely to hit $3.8 million this week. Costs a $1/ticket to enter. The drawing takes place on Wednesday night at 7:30pm.
Earning season is almost over. Companies reporting this week: Abercrombie, Costco, Dollar Tree, Rolls Royce, Target, and Urban Outfitters.
Indicator focus: February’s ISM non-manufacturing index (Mon); January’s factory orders (Tue); ADP payroll report, 2nd Beige Book from the Fed (Wed); Q4’s 2nd read on GDP (Wed); and February’s nonfarm payrolls and unemployment rate (Fri).
Have a great week,
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.