Weekly Market Update – Nov. 19, 2018

Last Week

  • Oil enters bear market after dropping from early October peak. Since October 3, WTI crude oil has declined as much as 27% given a number of headwinds including weaker demand, increased supply from key producers, expectations for higher U.S. supply and a strong U.S. dollar
  • In a public appearance last week, Federal Reserve Chair Jerome Powell remained positive on the U.S. economic outlook but acknowledged challenges the U.S. faces in 2019
  • UK Prime Minister Theresa May vowed to push forward with her Brexit deal despite some in the Conservative party calling for her to step down
  • U.S. Consumer Price Index figures were close to expectations, with CPI coming in at 2.5% year-over-year (y/y) and CPI Core ticking down from the prior reading to 2.1% y/y
  • Strong earnings growth still failing to calm equity markets. 93% of S&P 500 companies have released third quarter earnings results. Aggregate earnings growth (26.3% y/y) and revenue growth (8.0% y/y) remain ahead of expectations. All but two sectors (consumer staples and utilities) have topped sales expectations this quarter.

This Week

  • Third quarter earnings season nears finish line. Consumer discretionary and information technology companies make up the bulk of the remaining companies to report third quarter earnings.
  • Additional softening outside the U.S. expected in Purchasing Managers’ Index data. Japan, Germany, Europe, and the U.S. report flash manufacturing PMI figures on Friday with surveys showing relatively little expected change in Germany and Europe at 52.2 and 52.0, respectively.

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