It was a quiet week for investors, as none of the three major indexes we track moved significantly. The S&P 500 eased 0.1% lower during the holiday-shortened trading week. The MSCI ACWI ticked 0.1% higher as both developed and emerging markets posted positive results. The Bloomberg BarCap Aggregate Bond Index rose 0.1%.
Key Points for the Week
- Retail sales increased and pushed first quarter economic growth estimates higher.
- Chinese economic data also continue to improve.
- Corporate earnings were solid as earnings season continues.
The U.S. economy received some good news as retail sales rose 1.6% compared to last month. Through last Thursday, 15% of the S&P 500 had reported and more than three-quarters of the firms had beat earnings estimates. More companies will report this week. China reported 6.4% GDP growth in the first quarter, bolstering hopes of a recovery in Asia.
Concerns about a global recession continue to decline as key economic data show signs of strength and revival. The U.S. and China have the world’s two largest economies, and both received positive economic news.
The U.S. consumer has been a source of strength during this long period of economic growth; but in recent months, retail sales have shown some weakness. Last week, the Commerce Department reported retail sales rose a robust 1.6% in March, beating estimates of 1%. The report showed strength in nearly every economic category and provided evidence the U.S. consumer remains strong.
China also received some good news. China’s GDP rose 6.4% in the first quarter, beating expectations of 6.3% growth. As the chart shows, much of the growth was attributed to a surge in industrial production. Retail sales also bounced back after a series of declines had raised concerns the Chinese consumer was becoming wary.
China’s higher level of growth also provided evidence the combination of government stimulus and renewed optimism on trade is boosting the economy. China has taken steps to make borrowing easier, encouraged construction, and cut taxes in order to keep its economy from tailing off further. The positive tone on trade negotiations between the U.S. and China has also encouraged economic activity.
The economic improvements in the U.S. and China provide support for continued global growth. The good news won’t last forever, but it does push the risks of a downturn a few more months down the road.
I don’t know about you, but when I was in college, luxury was not the adjective I’d use to describe my living situation. In Vancouver, however, college students are able to rent out mansions for dirt cheap. The reason is Vancouver’s mansion owners are trying to avoid a new tax on empty houses that was implemented to bring expensive housing prices down.
This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
S&P 500 INDEX
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
MSCI ACWI INDEX
The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 23 emerging markets (EM) countries*. With 2,480 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index
The Bloomberg U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds
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