Weekly Market Commentary

April Joyner – Reuters
Fed’s Beige Book Shows Tariffs as Top Worry

Summary: The Federal Reserve’s latest summary of US business across its 12 regional districts showed that trade wars are at the top of mind for many executives. Businesses cited rising input costs and a rush to purchase affected goods in recent months. Despite rising input costs, few businesses indicated that they were raising prices at the consumer level. 

Sylvan Lane – The Hill
Trump Criticizes Fed In Break With Precedent

Summary: President Trump criticized the Federal Reserve for raising interest rates and hindering the US economy with its monetary policy. The rebuke is a break from the historical precedent of sitting presidents. The Fed is designed to be immune from political influence. Fed chairman Jerome Powell brushed off the comments saying that “no one in the administration” has given him concern. 

John Butters – FactSet
Companies Seeing More Negative Impact From Currency Shifts Than Tariffs

Summary: Recent earnings reports show that more companies are experiencing negative effects due to exchange rate impacts than tariffs. Additionally, these companies expect exchange rates to have more of a negative influence on revenues and earnings through the second half of the year. The addition of pressures from tariffs could lead to declines in multinationals’ growth. 

Jeffrey Kleintop – Charles Schwab
Top Five Global Risks for Investors

Summary: Geopolitics remain the number one threat to the markets in the second half of the year. The threat of military wars has subsided, but trade wars will negatively influence the markets. Chasing returns, rising inflation, US dollar strength, and fading market momentum are the other risks that investors should be focused on through the rest of 2018. 

Steven Vannelli – Knowledge Leaders Capital
Yield Curve Inversion: Not What It Appears

Summary: The recent calls for an inverted yield curve may be a bit early. Because the Fed has purchased trillions of dollars worth of bonds, term premiums that are typically positive have been pushed into negative territory. Subtracting these term premiums give a better view of the “risk neutral” yield curve. Looking at the curve this way shows that the curve is not as close to inverting as many would believe. 





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