Week of February 4 - 8, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

February 13, 2019

Weekly Economic Review

Weekly Macro Updates

Factory Orders (Nov) 0.3% est., -0.6% actual, -2.1% prior
Factory Orders ex Trans (Nov) -1.3% actual, 0.2% prior: R-
Durable Goods Orders (Nov F) 1.5% est., 0.7% actual, 0.8% prior
Durables ex Transportation (Nov F) 0.0% est., -0.4% actual, -0.3% prior
Cap Goods Orders Nondef Ex Air (Nov F) -0.1% est., -0.6% actual, -0.6% prior
Markit US Services PMI (Jan F) 54.2 est., 54.2 actual, 54.2 prior
Markit US Composite PMI (Jan F) 54.4 actual, 54.5 prior
ISM Non-Manufacturing Index (Jan) 57.1 est., 56.7 actual, 58.0 prior: R+
Initial Jobless Claims (Feb 2) 221k est., 234k actual, 253k prior
Continuing Claims (Jan 26) 1733k est., 1736k actual, 1778k prior: R-
Consumer Credit (Dec) $17.000b est., $16.554b actual. $22.408b prior: R+
MBA Mortgage Applications (Feb 1) -2.5% actual, -3.0% prior
Bloomberg Consumer Comfort (Feb 3) 58.2 actual, 57.4 prior

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

Capital Market Implications

Manufacturing numbers dominated economic releases last week.  Results showed continued expectations for slowing global growth as factory and durable goods orders were in a neutral or even negative trend versus expectations and prior releases.  Services numbers were more optimistic, with releases still indicating growth in the economy.  Internationally, growth numbers have seen more depressed levels, in part due to a China slowdown, Brexit uncertainties and overall increased risk sentiment; Italy entered into recession in the fourth quarter.  With the exception of housing, the U.S. consumer continues on a sounder footing.  Unemployment claims and consumer comfort numbers remained positive.  Mortgage applications were down versus expectations as higher interest rates, housing affordability and continuing market volatility weighed on home buyers.

Last week, domestic stocks continued their 2019 rise with modest gains while international stocks were negative.  The S&P 500 Index gained 0.1%, while the Dow Jones and the Russell 2000 indices were both up 0.3%.  Growth stocks drove positive returns for the week, up 0.7%, while value stocks were down -0.4%.  Developed and emerging international markets were down -1.4 and -1.3% respectively.  Sector performance was mixed, with the utilities sector showing the largest gains at 2.1%; in contrast, energy stocks lost -2.9% for the week.  Bonds were also positive for the week, with the aggregate index returning 0.4%.  Corporates led performance for the week, up 0.5%, while municipals bonds gained 0.3% and high yield bonds were up 0.2%.