Week of November 26 - 30, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

December 4, 2018

Weekly Economic Review

Weekly Macro Updates

GDP Annualized QoQ (3Q S 3.5% est., 3.5% actual, 3.5% prior
PCE Deflator YoY (Oct) 2.1% est., 2.0% actual, 2.0% prior
Personal Consumption (3Q S) 3.9% est., 3.6% actual. 4.0% prior
Bloomberg Consumer Comfort (Nov 25) 60.6 actual, 61.3 prior
Conf. Board Consumer Confidence (Nov) 135.7 est., 135.7 actual, 137.9 prior
Conf. Board Present Situation (Nov) 172.7 actual, 171.9 prior: R-
Conf. Board Expectations (Nov) 111.0 actual, 115.1 prior: R+
Initial Jobless Claims (Nov 24) 220k est., 234k actual, 224k prior
Continuing Claims (Nov 17) 1663k est., 1710k actual, 1660k prior: R-
New Home Sales MoM (Oct) 4.0% est., -8.9% actual, 1.0%, prior: R+
Pending Home Sales MoM (Oct) 0.5% est., -2.6% actual, 0.7%, prior: R+
ISM Manufacturing (Nov) 57.5 est., 59.3 actual, 57.7 prior
ISM New Orders (Nov) 62.1 actual, 57.4 prior

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

Capital Market Implications

Looking at consumer releases shows continued strength in the U.S. economy with confidence elevated and unemployment remaining low; retailers have also noted consumer strength.  The one negative point was housing, with both new and pending home sales dropping from the previous report.  Home builder Toll Brothers recently noted moderating demand as rising rates and headline reports of softening demand weighed on consumers.  Manufacturing releases were generally positive, although tariffs and potential shortages were cited as concerns, dampening business confidence numbers.  Core PCE deflators show inflation slowing; China and Eurozone CPI’s also signaled slowing inflation rates.

Last week, stocks saw their largest weekly increase so far in 2018, with markets responding to recent breakthroughs in negotiations on tariffs between China and the U.S.  The S&P 500 Index returned 4.9% while the Dow gained 5.3% and the Russell 2000 Index was up 3.0%.  Growth outperformed value, with the Russell 1000 Growth Index up 6.1% while the Russell 1000 Value Index returned 3.6%.  International markets also saw positive returns, with developed markets up 1.0% and emerging markets increasing by 2.7%.  Bonds saw a mixed week, with the U.S. Aggregate Index up slightly at 0.1%.  Corporate bonds were down slightly at -0.2%.  Both municipal and high yield markets saw stronger performance, returning 0.6% and 0.4% respectively.