Week of November 12 - 16, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

November 20, 2018

Weekly Economic Review

Weekly Macro Updates

CPI YoY (Oct) 2.5% est., 2.5% actual, 2.3% prior
CPI Ex Food and Energy YoY (Oct) 2.2% est., 2.1% actual, 2.2% prior
Import Price Index YoY (Oct) 3.3% est., 3.5% actual, 3.1% prior: R-
Export Price Index YoY (Oct) 3.1% actual, 2.7% prior
Kansas City Fed Manf. Activity (Nov) 11 est., 15 actual, 8 prior
Empire Manufacturing (Nov) 20.0 est., 23.3 actual, 21.1 prior
Philadelphia Fed Business Outlook (Nov) 20.0 est., 12.9 actual, 22.2 prior
Capacity Utilization (Oct) 78.2% est., 78.4% actual, 78.5% prior: R+
Business Inventories (Sep) 0.3% est., 0.3% actual, 0.5% prior
Initial Jobless Claims (Nov 10) 213k est., 216k actual, 214k prior
Continuing Claims (Nov 3) 1625k est., 1676k actual, 1630k prior: R+
Real Avg Hourly Earnings YoY (Oct) 0.7% actual, 0.5% prior
Retail Sales Advance MoM (Oct) 0.5% est., 0.8% actual, -0.1% prior: R-
Retail Sales ex Auto MoM (Oct) 0.5% est., 0.7% actual, -0.1% 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 continue to paint a strong domestic economic picture, with unemployment staying at historic lows and manufacturing numbers showing growth.  Slowing global growth is an increasing risk, however, with economic output contracting in Japan and Germany in the 3rd quarter and consumer spending and bank lending lower in China in the month of October.  While some of the decrease was the result of a typhoon and earthquake in Japan and issues at German auto plants over compliance with new emissions standards, the potential for a global slowdown has the potential to dampen the U.S. economy (and the markets).  It should also be noted though that the U.S.’s low levels of exports relative to other countries will help to hedge against weakness.

Slowing global growth, lower energy prices and reduced corporate earnings guidance weighed on stocks last week, with the S&P 500 Index down -1.5% and the Dow retreating by -2.2%.  The Russell indices saw similar declines, although value stocks fared better than their growth counterparts.  International markets were also lower for the week, with developed markets down -1.4% and emerging markets contracting -1.1%.  Bond returns were mixed, with the U.S. Aggregate Index gaining 0.5%.  Corporate bonds were down slightly at -0.2% while municipals were up 0.5%.  High yield bonds had a return of -1.3%.