Week of December 10 - 14, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

December 18, 2018

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Dec 8) 226k est., 206k actual, 233k prior
Continuing Claims (Dec 1 ) 1649 est., 1661 actual, 1636 prior
JOLTS Job Openings (Oct) 7100 est., 7079 actual, 6960 prior: R-
NFIB Small Business Optimism (Nov) 107.0 est., 104.8 actual, 107.4 prior
PPI Ex Food & Energy YoY (Nov) 2.5% est., 2.7% actual, 2.6% prior
CPI Ex Food & Energy YoY (Nov) 2.2% est., 2.2% actual, 2.1% prior
Real Average Hourly Earnings YoY (Nov) 0.8% actual, 0.6% prior: R-
Import Prices Index YoY (Nov) 1.3% est., 0.7% actual, 3.3% prior: R-
Export Prices Index YoY (Nov) 1.8% actual, 3.1% prior
Retail Sales Ex Auto & Gas MoM (Nov) 0.4% est., 0.5% actual, 0.7% prior: R+
Industrial Production MoM (Nov) 0.3% est., 0.6% actual, -0.2% prior
Market U.S. Composite PMI (Dec P) 53.6 actual, 54.7 prior
Empire Manufacturing (Dec) 20.0 est., 10.9 actual, 23.3 prior
NAHB Housing Market Index (Dec) 60 est., 56 actual, 60 prior

 Strong or Improving
 Inconclusive or lacking trend
 Weak or declining
R+ Revised up
R- Revised down

Capital Market Implications

As has been the case of late, last week’s economic releases painted a mixed picture of the U.S. economy. In addition to continued softness in the housing market, the manufacturing sector turned weaker in November and small business confidence fell to its lowest level in months. On the other hand, labor markets remained strong and reflective of the strength of the consumer, retail sales for November were better than expected and previous months’ sales were adjusted upwards. With November retail sales ahead of estimates and October sales revised higher, this holiday selling season is shaping up to be a good one, which bodes well for retailers and fourth-quarter GDP.

Last Friday, with weak economic news out of China and soft flash PMI’s here at home, stock investors capitulated and drove stock prices down for the day and the week overall. For the five day sessions, the Dow Jones Industrial Average and the S&P 500 Index both sank -1.2%. Most sectors of the market declined last week, but the major carnage took place in the energy and financial sectors, as they plunged more than -3.0%. Closing out the week flat to slightly ahead, technology and communications companies posted a relatively decent week.  International markets also ended the week lower, as developed markets and emerging markets fell just shy of -1.0%. Although the yield on the 10-year Treasury note inched higher last week, in general, bonds performed well. The U.S. Aggregate Bond Index and high yield bonds held steady while corporate bonds rallied modestly. Ten-year municipal bonds were the only laggards, as they declined -0.2%.