Your Weekly Summary – July 2, 2018

Down All Around

 

The Dow, S&P, NASDAQ, Russell 2000 and the International Stock Markets were down last week. The only positive Stock Market I could find was Russia, where the MSCI Russia Index was up 3.50%. The Dow was down 1.31%, the S&P 500 1.26%, the NASDAQ 2.37% and the Russell 2000 Small Cap Index down 2.46%. On the flip side, the Barclay’s Aggregate Bond Index was up .34% for the week.

 

Last week was much of the same, additional “tit for tat” on Tariff issues, continued discussions on our short-term interest rate future.

 

Perhaps the worst news happened on Sunday night. I was watching my NY Yankees crush the Boston Red Sox, when across the bottom of the TV screen read that LeBron James decided to sign with the LA Lakers and not the Philadelphia 76ers.   If his decision would have been based on which team is now ready to compete, well, that would be the 76ers. Can’t image LeBron receiving a warm reception when LA is in town next season to play the 76ers!

 

1st Quarter GDP

 

The first Quarter 2018 Gross Domestic Product was revised down from the last reading of 2.2% to 2.0%. Keep in mind that the 1st Quarter GDP numbers for the last few years have been very low with inclement weather having a significant impact. In a few weeks, we’ll hear the first reading on the 2nd Quarter GDP. Many are speculating the number will be in the high 3’s or even 4%. This will be the first quarter where the tax cuts will have a full impact on most consumers. What impact will this have on inflation readings? How will a high 3% or 4% number influence members of the Federal Reserve? Will be interesting later this month!!

 

Interest Rates

 

The 10 year US Treasury Yield decreased from 2.90% to 2.85%. The 2 to 10 year slope we’ve mentioned a few times, closed the week with the spread narrowing to .32%. Assuming our Federal Reserve continues to hike short term rates, and if longer term rates don’t increase, we may see an “inverted yield” curve. Most say, an inverted yield curve occurs approximately 6 to 18 months prior to an economic recession. Over the weekend, Barron’s Magazine was suggesting the current economic bull market cycle may come to an end in 2020 as tax cuts wear off, interest rates are forecast to be higher and the Fed would have reduced its balance sheet.

 

As always, time will tell, it always does!

 

Economic Data

 

The economic data is light this week with Wednesday being July 4th. On Monday, we’ll see the monthly report on Manufacturing and on Friday, the Monthly Unemployment Report.

 

Question of the Week?

 

In 2017, what was the largest selling “Sports Car” in the United States?

 

a) Chevrolet Corvette

b) Dodge Challenger

c) Audi A5

d) Ford Mustang

e) Mazda MX-5 Miata

e) Chevrolet Camaro

Answer to Last Week’s Question of the Week!

 

 

The question was: “When the Declaration of the United States was signed in 1776, what was the population of the United States?”

 

a) 5 Million People

b) 2.5 Million People

c) 1 Million People

d) 10 Million People

 

The correct answer is b) 2.5 Million People