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.

This week’s HCM Optimized Trend Indicator (OTI) stock of the week is JD.com, Inc. (JD). Yahoo Finance says “JD.com, Inc., through its subsidiaries, operates as an e-commerce company and retail infrastructure service provider in the People's Republic of China. It operates in two segments, JD Retail and New Businesses. The company offers home appliances; mobile handsets and other digital products; desktop, laptop, and other computers, as well as printers and other office equipment; furniture and household goods; apparel; cosmetics, personal care items, and pet products; women's shoes, bags, jewelry, and luxury goods; men's shoes, sports gears, and fitness equipment; automobiles and accessories; maternal and childcare products, toys, and musical instruments; and food, beverage, and fresh produce.” We always want to make sure users know that the OTI isn’t designed to get you in at the bottom and out at the top, but to try to help get you in near the start of an uptrend and out near the start of a downtrend. We believe the chart below shows this intention well, particularly with the sell in July 2015, the buy in February 2017, and the most recent buy in February 2019. JD has seen a lot of movement, and we believe OTI users will be happy to see that the OTI is handling this stock as intended and helping users’ bottom lines in the process. Way to go OTI!


05-08-2019_JD

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