March 12, 2018 – Weekly Market Commentary



 

American Flag - Market Commentary

Brooke Singman, John Roberts – Fox News
Gary Cohn Announces Resignation

Summary: White House national economic council director announced his resignation after signalling that he would not back President Trump’s recently proposed tariffs. Cohn had held his position since the beginning of the administration. Markets reacted negatively to the news based on the thought that Cohn’s departure will complicate any future trade negotiations. 

 

Capitol Hill - Market Commentary

Andrew Mayeda and Jennifer Epstein – Bloomberg Politics
Trump Signs Tariff Order on Metals With Wiggle Room for Allies

Summary: President Trump signed an order that will impose a 25% duty on imported steel and a 10% duty on aluminum starting on March 23rd. In what was likely a bargaining chip for NAFTA talks, North American allies Canada and Mexico are exempt from the order. Other US trading parters, such a as the European Union and China, announced that they are reveiwing retaliatory measures of their own. 

 

Open sign - Market Commentary

Jeff Cox – CNBC
Payrolls increase by 313,000 in February vs. 200,000 Expected

Summary: The US added 313,000 jobs in February, crushing expectations of 200,000. The unemployment rate stayed firm at 4.1%, and wage growth remained muted at 2.6% year over year. Job growth was mostly driven by the construction and retail sectors. The stable unemployment rate and muted wage growth drove a stronger Friday in the stock market. 

 

European Central Bank Logo- Market Commentary

Claire Jones and Michael Hunter – Financial Times
ECB Drops Pledge to Buy More Bonds if Needed

Summary: The European Central Bank dropped an explicit commitment to expand its bond-buying program is the eurozone economy slows. Investors took the removal of the promise as a sign that the bank is focused on ending its quantitative easing measures sooner rather than later. European markets fell on the news. 

 

Bloomberg Gadfly Logo - Market Commentary

Stephen Gandel – Bloomberg Gadfly
Five Charts That Show How Companies Are Spending Their Tax Savings

Summary: Corporations and shareholders are expected to see the most windfalls from tax reforms. Stock buybacks are on track to have their best quarter ever and many companies should get an immediate boost to retained earnings. Roughly 60% of tax savings will be going to shareholders while around 15% will be going to employees. 

 

Schwab Logo - Market Commentary

Veerapan Perianan – Charles Schwab
Why Market Returns May Be Lower and Global Diversification is Important

Summary: Market returns over the next decade are expected to fall short of historical averages. Headwinds from low inflation, high valuations, and historically low interest rates are expected to moderate stock and bond returns going forward. Because valuations are lower overseas, investors can benefit over the long-term by maintaining an allocation to global equities. 

 

BlackRock Logo - Market Commentary

Russ Koesterich, CFA – BlackRock
Why Volatility May Be a Bigger Threat Than Rates

Summary: Koesterich says that investors should be worrying less about rising interest rates and more about volatility rising from tightening financial conditions. The current bull market has been driven by cheap money and volatility is likely to stay close to historical norms as the Fed unwinds its balance sheet. Equity multiples are inversely correlated with volatility. If volatility remains high then multiple compression will likely become a headwind to equity markets. 

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