At Waterloo Capital Management, we monitor certain economist and capital market theorists on an ongoing basis for the development of our tactical themes that we use in steering our portfolios. In light of all the news you are bombarded with, we thought we would help you “tune out the noise.” We have taken the liberty…Read More
Michael S. Schmidt – The New York TimesComey Memo Says Trump Asked Him to End Flynn InvestigationSummary:
Equity markets sold off following reports that President Trump had asked former F.B.I. director James Comey to shut down a federal investigation into former national security advisor Michael Flynn. The S&P 500 posted its worst one-day performance of the year falling 1.8%. The concern for investors is that further investigations could derail tax reform and deregulation efforts which have been priced into current valuation levels.
Lucia Mutikani – ReutersU.S. Labor Market Tightening; Inflation Pressures BuildingSummary:
Applications for US jobless benefits unexpectedly fell last week and April producer prices (PPI) rebounded. The number of Americans on unemployment fell to a 28 and a half year low last month. Benefit claims have remained below the 300,000 threshold associated with a healthy labor market for the longest period since 1970. PPI increased 0.5% to bring the year over year increase to 2.5%. The data shows that the Fed could reach its employment and inflation targets faster than previously thought which could lead to larger or more frequent rate hikes this year.
BBC NewsEmmanuel Macron Defeats Le Pen to Become French PresidentSummary:
Emmanuel Macron secured over 66% of the popular vote to become the French President. The former investment banker is France’s youngest president and leads a new party, En Marche, which he founded after leaving the Socialist party.The immediate international reaction has been a sigh of relief given the populist nature of Le Pen’s policies.Macron has many hurdles ahead of him.The immediate challenge is securing parliamentary support. En Marche has no parliamentary seats and drumming up the backing to secure a majority prior to the June 11th and 18th elections is unlikely.
Lucia Mutikani – ReutersU.S. First Quarter Growth Weakest in Three Years as Consumer Spending FaltersSummary:
US GDP rose 0.7% during Q1, the weakest pace in three years. The weak performance was influenced by a contraction in consumer spending activity and government spending. The slowdown was cushioned by accelerated business spending, led by a rebound in the energy sector, and nonresidential structures. Although consumer spending slowed, wage growth was the fastest in 10 years, and consumer and business confidence remained near highs.
Bryony Jones and Hilary Clarke – CNNLe Pen Faces Macron in Final Round of French Presidential ElectionSummary:
Political newcomer Emmanuel Macron and far-right populist Marine Le Pen will face off in the final round of the French presidential election. French voters reflected similar attitudes to those in the US and Britain by denouncing traditional candidates. Macron has never run for public office, and Le Pen has campaigned on an anti-immigration and anti-European Union platform. Macron has a significant lead in early round two opinion polls. The final election will occur on May 7th.
Lucia Mutikani – ReutersU.S. Retail Sales, Inflation Data Highlight Weak First Quarter GrowthSummary:
During March U.S. retail sales fell for the second straight month and consumer prices dropped for the first time in over a year. Retail sales were mostly hindered by a pullback in auto sales, and inflation was pared by lower fuel prices. Any decline in inflation could make the Fed reconsider its rate hike plans this year. In the past, inflation coming in below their 2% target has been cited as a reason for keeping monetary policy unchanged.
MarketWatchSelected Highlights From the Fed MinutesSummary:
If the economy remains stable, the Fed hopes to reduce their balance sheet this year. The fed wants to gradually reduce their balance sheet in a predictable way to avoid market shocks. They also noted the rapid rise in equity prices and that some areas of the markets are priced “quite high” relative to standard valuation measures. The members had mixed views on inflation with some believing that accommodation should remain in place until 2% inflation was sustained while others believe that the current inflation trend is strong enough to warrant a faster pace of scaling back accommodation.
Download the Waterloo Capital 2017 Outlook
2017 is shaping up to a be a year in which the future direction of politics and economic policies are decided.
Click the link to read how we view the economic landscape and how we are positioning our portfolios to stay a step ahead of the ups and downs this year is sure to bring.
Explore Waterloo’s views on where the markets and economy are headed this year.Read More
Natalia Wojcik – CNBCConsumer Confidence Soars in March to Highest Level Since December 2000Summary:
The Consumer Confidence Index hit its highest level in 16 years last week, easily beating analysts’ expectations. Consumer spending activity is essential to generating future growth and this survey indicates positive short-term prospects for the economy.
Lauren Thomas – CNBCFed’s Dudley: We Want to Make Monetary Policy ‘less accommodative’Summary:
The president of the New York Federal Reserve thinks the Fed should be “less accommodative” as the US reaches full employment. Dudley’s main argument is that remaining too accommodative will lead to an inflation problem. The U.S. is “pretty close” to meeting both the Fed’s employment and inflation objectives, he said. The Fed is still projecting three rate increases for 2017.
The US Fed raised rates, the People’s Bank of China followed suit, the Bank of Japan kept its policies unchanged, a lone dissenter at the Bank of England caught the markets off guard, Theresa May gained power to invoke Article 50, and thought leaders focused on the potential effects of fixed income market complacency, and why the markets’ stability in the face of geopolitical and policy events indicates a solid foundation for further appreciation.Read More