April 9, 2018 – Weekly Market Commentary


CNBC Logo - Weekly Market Commentary

Chloe Aiello – CNBC
Trump Proposes $100 Billion in Additional Tariffs on Chinese Products

Summary: President Trump instructed the US Trade Representative to consider an additional $100 billion of tariffs against China because of China’s announcement regarding retaliatory trade measures against the US. US leadership has said that representatives are still open to talks with China regarding best practices for trade and avoiding a trade war. Markets sold off on the news. 


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Ann Saphir, Jason Lange – Reuters
Fed Chair Vague on Trade Risks; His Next No. 2, Anything But

Summary: Fed chairman Jerome Powell downplayed the current trade atmosphere in his recent remarks, stating that it’s too soon to say if trade issue would affect the US economy. John Williams, who is the incoming head of the NY Fed and vice chair of the Fed’s policy-setting committee, said that he is worried about the prospect of an all-out trade war because it would lead to slow growth, low productivity and an increase in inflation on a global scale.


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Ryan Vlastelica – Market Watch
The S&P 500 has Already Tripled the Number of 1% Moves Seen in All of 2017

Summary: The US stock market has already seen more volatility than all of 2017. The S&P 500 has had 15 days with a 1% rise and 13 days with a 1% drop – and other indexes have experienced similar numbers. The swings aren’t uncommon of the market in general but represent a big change from the eight 1% moves experienced in 2017. Reasons for the volatility include the recent market correction, Fed rate hikes, and shaky trade relations between the US and China.


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Liz Ann Sonders – Charles Schwab
Gettin’ Tighter: Financial Conditions’ Effect on Stocks

Summary: With debt levels at record highs, tightening financial conditions influence market volatility and can have a negative effect on economic growth if debt servicing costs rise too quickly. Tighter financial conditions typically lead investors to be more discerning meaning that market leadership experiences more frequent rotations and correlations drop. 


Capitol Hill - Weekly Market Commentary

Russ Koesterich, CFA – BlackRock
No, Washington is Not to Blame for the Volatility

Summary: Volatility can be attributed to culprits other than Washington. High yield spreads are one of the best coincident indicators of market volatility. When spreads are higher, volatility tends to follow and high yield spreads have been widening since February. Furthermore, financial conditions have an inevitable effect on equities, and the US Libor OIS spread that measures credit conditions has doubled in recent months. Lastly, the economy is strong, but simply not as strong as many had hoped and central banks in both the US and Europe will not be easing policy anytime soon in their attempts to normalize monetary conditions.





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