May 8, 2019

The trade issue with China has caused a lot of volatility the last few days. Nobody really knows what will happen, but odds are high that a deal will be struck. So what happens if we don't strike a trade deal? Sometimes, the market just sells off a bit and we all move on. The world will not stop spinning and business will continue.  Sticking with our outlook, we are looking for a pause and pullback in the second quarter, with a nice rally building into Q3 and Q4. These pullbacks should be seen as buying opportunities.

05-08-2019 SPY

As expected, the Federal Open Market Committee (FOMC) maintained interest rates at their present level. The Committee noted that the labor market remains strong and that economic activity rose at a solid rate. However, the growth of household spending and business fixed investment slowed in the first quarter. As to the prospect of future rate increases, the FOMC determined that it would be patient in light of global economic developments, financial developments, and inflation running below its 2% objective.

  • April saw a whopping 263,000 new jobs added, and the unemployment rate dropped 0.2 percentage point to 3.6% — the lowest rate since December 1969.
  • The April tally far exceeded the average monthly gain over the prior 12 months of 213,000.
  • Notable job gains occurred in professional and business services (76,000), construction (33,000), health care (27,000), and social assistance (26,000).
  • Employment in manufacturing changed little for the third month in a row, evidencing a stagnant manufacturing sector.
  • The number of unemployed persons decreased by 387,000 to 5.8 million.
  • The labor force participation rate declined by 0.2 percentage point to 62.8% in April but was unchanged from a year earlier.
  • The employment-population ratio was unchanged at 60.6% in April and has been either 60.6% or 60.7% since October 2018.
  • In April, average hourly earnings rose by $0.06 to $27.77.
  • Over the year, average hourly earnings have increased by 3.2%.
  • The average workweek decreased by 0.1 hour to 34.4 hours in April.

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