Week of February 11 - 15, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

February 20, 2019

Weekly Economic Review

Weekly Macro Updates

U. of Mich. Sentiment (Feb P) 93.7 est., 95.5 actual. 91.2 prior
U. of Mich. Expectations (Feb P) 85.5 est., 86.2 actual. 79.9 prior
U. of Mich. 1 Yr Inflation (Feb P) 2.5% actual. 2.7% prior
JOLTS Job Openings (Dec) 6846 est., 7335 actual, 7166 prior: R+
Real Avg Hourly Earnings YoY (Jan) 1.7% actual, 1.3% prior: R+
Initial Jobless Claims (Feb 9) 225k est., 239k actual, 235k prior: R+
Continuing Claims (Feb 2) 1740k est., 1773k actual, 1736k prior
Retail Sales Advance MoM (Dec) 0.1% est., -1.2% actual, 0.1% prior: R-
CPI YoY (Jan) 1.5% est., 1.6% actual, 1.9% prior
CPI ex Food and Energy YoY (Jan) 2.1% est., 2.2% actual, 2.2% prior
PPI Final Demand YoY (Jan) 2.1% est., 2.0% actual, 2.5% prior
Empire Manufacturing (Feb) 7.0 est., 8.8 actual, 3.9 prior
Capacity Utilization (Jan) 78.7 est., 78.2 actual, 78.8 prior: R+

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

Capital Market Implications

Last week’s economic releases painted a generally positive picture.  University of Michigan sentiment and expectations indicators highlighted the U.S. economy’s resilience as the effects of the government shutdown and late 2018 market volatility faded.  Inflation remained neutral as CPI and PPI numbers showed declines; year over year hourly earnings did show the presence of wage growth.  Unemployment claims increased slightly, with the four week moving average the highest it’s been in over a year.  December retail sales were headline news as they showed a sharp decline from the previous month although sales actually increased 2.3% from the previous year.

Stock markets rallied strongly last week, with the S&P 500 Index up 2.6%.  The Dow Jones and Russell indices saw even stronger gains, returning 3.2% and 4.2% respectively.  Value stocks, which were up 2.8%, did slightly better than growth stocks, which gained 2.4%.  International stocks indices were mixed.  Developed markets saw gains in line with the U.S., up 2.0%, while emerging markets were down -0.5%.  All of the sectors of the market, with the exception of utilities, were up last week, with energy and industrial stocks the largest gainers.  Year-to-date, all of the sectors of the market are up, with industrials the top performer.  Bonds were also mixed for the week, with the aggregate index down -0.1%.  Corporate and municipal bonds were flat while high yield bonds, which trade more in line with stocks, gained 0.6%.