Weekly Market Commentary

Washington DC - Waterloo Weekly Market Commentary

John Fritze – USA Today
US Won’t Endorse G-7 Joint Statement

Summary: President Trump instructed US officials not to endorse a joint statement with G-7 world leaders. His instruction was billed as a response to comments made by Canadian Prime Minister Justin Trudeau who said that Canada would be moving forward with retaliatory tariffs against the US. The move further complicates diplomacy and trade talks between the US and its allies.

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Reuters Staff – Reuters
U.S April Wholesale Inventories Revised
Up Slightly

Summary: U.S wholesale inventory growth beat estimates, increasing 5.8% year-on-year in April. At this pace, it would take wholesalers 1.28 months to clear shelves. Related data showed that sales volumes are outpacing inventory growth which indicates that wholesalers may be gaining pricing power which could lead to inflationary pressures. 

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Polina Vlasenko, PhD – AIER
A Milestone for the Economic Expansion

Summary: The current, 73-month business-cycle expansion, is now the fourth largest expansion since World War II. Despite this milestone, the current expansion is underperforming in output, unemployment and earnings. This implies that the economy has either hit its limits, hinting at a possible recession, or that the economy has yet to employ all of its available resources. The best we can do is look into the near future.

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Liz Sonders, Brad Sorensen, Jeffrey Kleintop – Charles Schwab & Co., Inc
Schwab Market Perspective: Rough Waters for Summer?

Summary: The U.S economy is in good shape; U.S indexes have been trending higher, consumers are spending more, and businesses are confident. Moreover, The Federal Open Market Committee (FOMC) is expected to bump rates during its upcoming June 13th meeting. Finally, G7 leaders met up to discuss trade concerns; the 7 countries are nearing a recession, increasing their vulnerability to trade risks.

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Graham Rapier – Business Insider
Bridgewater Associates Warns: 2019 To Be a Dangerous Year for the Economy

Summary: Bridgewater Associates is bearish on almost every financial asset. The firm claims that the crucial market driver is at 10 o’clock, and forecasts danger once it hits 12. The hedge fund projects the yield curve for Treasury bonds to remain flat; Oil will hit $62, and the dollar will fall 3.5% compared to other currencies. The major driver of the market is nearing its end.

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Jeffrey Rosenberg – BlackRock Blog
What 1969 Can Teach Us About Today’s Flat Yield Curve

Summary: Despite the similarities, today’s economic landscape differs from the recession of 1969-70. Fed quantitative easing programs and a push for all term premia are primarily flattening the curve and creating vulnerabilities, but modest inflation is keeping recessionary pressures low. The best bet is likely to hedge both scenarios by shortening duration while inflation is rising and extending duration if growth shocks arise. 





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