GDP 4.1%, Market Falls?
The big release last week was the 2nd Quarter GDP reading which came in @ 4.1%, slightly below what many were expecting, sending the Market Indexes down for the day last Friday. However for the week, the Dow was up 1.57%, the S&P 500 .61%, the Russell 2000 was down 1.96% and the Nasdaq Composite fell 1.5%.
Barclays Aggregate Bond Index fell .17% and has the Index down 1.64%.
The International Equity Markets moved up with the MSCI EAFE Index rising 1.35%.
The 4.1% 2nd Quarter GDP reading was the highest reading since 2014. Spending on Durable Goods rose 9.3% and Exports rose 9.3%. Many believe the increase in Exports was boosted by significant buying ahead of Tariffs. Consumer spending came in with a nice 4.0% increase.
4.1% is certainly a good number. What will happen going forward? Rising Interest Rates, Tariffs, and an expanding economy; should be interesting!!
Interest Rates
The 10 Year US Treasury Yield was up last week, closing Friday with a yield of 2.96%, up from 2.89%. The 2 year to 10 year spread increased to .29%. The Financial Sector, which is supposed to benefit from a widening yield curve, increased 2.1% on the week putting the Sector in positive territory for 2018.
Tidbits
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Prior to the threat of tariffs, the United States already was imposing 2.5% tariff on imported foreign vehicles. The European Union was already imposing a 10% tariff on American vehicles.
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The top 3 American Exports sold in 2017 to foreign buyers were aircrafts, gasoline and motor vehicles
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Social Security: There are 2.8 workers paying payroll taxes for every 1 Social Security beneficiary in 2018. (Please watch for our upcoming update blog on Social Security)
The Week Ahead
This will be another week of Corporate Earnings Reports. It looks like another excellent quarter for increasing Corporate Profits. Apple is the big name this week.
For economic reports, Monday we’ll see pending homes sales for June. Tuesday, the Case-Shiller home price Index for May, personal income and outlays for June. On Wednesday, we’ll review construction spending for June and manufacturing indices and motor vehicle sales. Also on Wednesday, we’ll hear the Federal Reserve decision on interest rates and Friday brings us the monthly payroll report.
Question of the Week?
Which Medical Profession has the highest current paying job?
a) Plastic Surgeon
b) Cardiologist
c) Medical Director
d) Orthopedic Surgeon
e) Anesthesiologist
Answer to Last Week’s Question of the Week!
The question was: Which Country is the largest “Importer of Goods” in US dollars?
a) Germany
b) Japan
c) China
d) United States
The answer is: c) China
