Week of May 13 - 17, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

May 21, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (May 11) 220k est., 212k actual, 228k prior
Continuing Claims (May 4) 1673k est., 1660k actual, 1688k prior
Empire Manufacturing (May) 8.0 est., 17.8 actual, 10.1 prior
Philadelphia Federal Reserve Business Outlook Index (May) 9.0 est., 16.6 actual, 8.5 prior
Chicago Federal Reserve National Activity Index (Apr) -0.20 est., -0.45 actual, 0.05 prior: R+
Retail Sales Control Group MoM (Apr) 0.3% est., 0.0% actual, 1.1% prior: R+
Industrial Production (Apr) 0.0% est., -0.5% actual, 0.2% prior: R+
NAHB Housing Market Index (May) 64 est., 66 actual, 63 prior
Housing Starts MoM (Apr) 6.2% est., 5.7% actual, 1.7% prior: R+
Building Permits MoM (Apr) 0.1% est., 0.6% actual, -0.2% prior: R+
Leading Economic Indicator Index (Apr) 0.2% est., 0.2% actual, 0.3% prior: R-
University of Michigan Sentiment Survey (May P) 97.2 est., 102.4 actual, 97.2 prior
U. of Michigan Expectations (May P ) 86.8 est., 96.0 actual, 87.4 prior
Existing Home Sales (Apr) 2.7% est., -0.4% actual, -4.9% prior

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

Capital Market Implications

Last week’s economic releases were mixed, with several heretofore-weak sectors showing improvement while others continued to soften.  Regional manufacturing surveys turned positive in May and, although the national manufacturing report from Chicago was weak in April, its February level was revised from negative to positive.  Housing also demonstrated improvement, as housing starts and building permits in April were stronger than anticipated.  According to the University of Michigan Sentiment Index, consumer confidence hit its highest level in fifteen years this month and the NAHB index suggested homebuilders remained confident in May as well.  There was however a disconnect between consumer confidence and retail sales in May, as the control group for sales unexpectedly turned down after posting healthy results in April.

Given trade tensions between the US and China escalated last week, it was surprising to see how well markets recovered from Monday’s sell-off.  In the end, both the Dow Jones Industrial Average and the S&P 500 Index slipped less than -0.7% for the week overall.  Smaller capitalization stocks however were hit hard, as they sank -2.3%.  There was a similar occurrence in the foreign markets, with developed foreign markets ending up on the week while emerging markets (including China) plunged -3.6%.  Once again, investors showed a preference for bonds and, as such, yields fell and bond prices rose last week.  The Barclays US Aggregate Bond Index, corporate bonds and 10-year municipal bonds all increased at more than 0.3% while only high yield bonds declined.