Weekly Market Update – May 13, 2019

 

Last Week

  • Global Equities Shift Lower on Trade. Renewed trade concerns helped drive global equities 2.5% lower and temporarily invert the U.S. yield curve at the three-month and 10-year tenors. Emerging market equities declined the most of the major regions falling 4.4%, driving the year-to-date return to 7.2%, the lowest of the major regions. Global equities are up 13.3% for the year led by the 16.3% return from U.S. equities.
  • Trump’s Trade-Related Tweet Rattles Markets – U.S. President Donald Trump tweeted early last week that the U.S. was increasing tariffs from 10% to 25% on $200 billion worth of Chinese goods and potentially implementing tariffs on all goods imported from China. Trump’s threat was prompted by China’s backtracking on trade promises, including indoctrinating trade promises into Chinese law.
  • Markets Show 59% Probability of Rate Cut by Year End – Markets continue to expect a rate cut by year end despite Federal Reserve Chairman Jerome Powell’s focus on the possibility that recent soft inflation readings were merely transitory at his recent post-FOMC meeting press conference, further adding that the Fed didn’t see a reason to adjust interest rates higher or lower any time soon.
  • Ride Sharing Competition Intensifies on Public Market – Investors will now have better insight into the competition between Lyft and Uber as both companies — now publicly listed — will be reporting quarterly earnings going forward.

This Week

  • Deere & Co. and Walmart to Release Earnings – The majority of the companies left to report first quarter 2019 earnings will report out of the consumer discretionary sector.
  • Chinese Data Release to Provide Gauge on Economy -China will release data on fixed asset investment, industrial production and retail sales that are expected to show healthy increases from the prior year.
  • Trump Likely to Delay Auto Tariff Decision -The Commerce Department set a May 18 deadline for Trump to decide on whether he would like to move forward with a 25% tariff on automobiles from Japan and the European Union. The president delayed the decision last year and said he will not implement the tariff if talks were progressing smoothly. Automakers expect another deadline delay of 180 days.

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