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Newsletter: In the Markets – Week-Ending May 5th, 2017

by Peter J. Creedon

Newsletter: In the Markets – Week-Ending May 5th, 2017

Crystal Brook Advisors

We Make Financial Planning Crystal Clear™


United States: After slipping 2.4 points in March, the ISM non-manufacturing index bounced back to 57.5 in April. Both production and new orders led the improvement in April, which reinforces our call for economic activity to rebound in Q2. (1)  The new orders index added 4.3 points to post its current cycle high of 63.2. Demand was boosted by better global economic conditions, as new export orders jumped 3 points to 65.5. (1)


Europe:  Chinese state-owned newspaper Global Times has responded caustically to an article—’ China may put South Asia on road to debt trap ‘—published in The Economic Times. (2)  The article had highlighted that China’s grandiose global connectivity initiative—One Belt One Road (OBOR) or Belt & Road Initiative (linking China with Europe via SE Asia & C Asia through land & sea links)—which is set to receive a formal endorsement at the May 14-15 international meet has the potential of adverse economic implications for countries in South Asia. (2)


Asia:  A United Nations report is warning that economic growth in Asian countries “faces significant risk” from rising levels of trade protectionism. (3)  It says experts are especially worried about United States’ trade policies with important trading partners such as China. (3)  The U.N. Economic and Social Commission for Asia and the Pacific (UNESCAP) report mainly says good things about Asian economies. Such countries are now responsible for about 30 percent of all trade worldwide. The report noted that the percentage could rise to 50 percent by 2050 if the economies continue expanding. (3)


Latin America:  U.S. President Donald Trump’s opposition to the North American Free Trade Agreement and his withdrawal from the Trans-Pacific Partnership has led some critics to claim that the United States is turning its back to regional trading partners and that Trump is thus freeing up China to make inroads into Latin America. But China’s presence in the Western Hemisphere is already well-established, having predated Trump’s election by almost 20 years. Beijing’s involvement in the region is subject to the ebb and flow of the region’s economic and political changes, but it stems from the needs both of China and corresponding Latin American capitals. (4)


Monday 5/1 

  • Shares of the largest U.S. companies hit record highs on Monday, lifting Wall Street and a gauge of key world equity indexes, while data on U.S. drilling and output kept downward pressure on oil prices. (5)
  • Data showed U.S. manufacturing activity slowed in April while consumer spending was unchanged in March and a key inflation measure recorded its first monthly drop since 2001. Despite the soft data, traders continued to see a 7-in-10 chance that the Federal Reserve will hike interest rates in June. (5)


Tuesday 5/2

  • S. stock indexes inched higher in late morning trade Tuesday, as the Federal Reserve began its two-day meeting. (6)
  • The Nasdaq and the S&P 500 were just above break-even, while the Dow Jones industrial average was up 0.1%. Volume in the stock market today rose on both major exchanges. (6)


Wednesday 5/3

  • The bond market, even with Wednesday’s post-Fed sell-off, has priced in economic weakness and priced out the post-election Trump reflation trade. The stock market, meanwhile, is bucking up against its highs, helped by an earnings season that is proving to be the best since 2011. (7)


Thursday 5/4

  • Oil prices found their footing after tumbling during U.S. trading on uncertainty over whether OPEC will extend an agreement to cut production to shore up prices. Member nations of the Organization of the Petroleum Exporting Countries are due to discuss the deal later this month. U.S. benchmark crude futures rose 20 cents to $45.61 a barrel in electronic trading on the New York Mercantile Exchange. The contract slumped to its lowest level since late November, losing $2.30, or nearly 5 percent, to settle at $45.52 a barrel on Thursday. Brent crude, the standard for international oils, rose 19 cents to $48.47 in London after a similar decline. (8)


Friday 5/5

  • The Bureau of Labor Statistics said nonfarm payrolls added 211,000 jobs in April vs. expectations for 185,000. Revisions to earlier months were mixed. The March number was revised downward from 98,000 to 79,000. But the February number was revised upward from 219,000 to 232,000. The net effect to revisions was only a 6,000 subtraction. (9)


Contributor: Thomas Padula


(1)  Wells Fargo Economic

(2)  Economic Times

(3)  Voice of America

(4)  Real Clear World

(5)  Reuters

(6)  Market Watch

(7)  CNBC

(8)  ABC News

(9)  Investor’s Business Daily

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