Week of October 22 - 26, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

October 30, 2018

Weekly Economic Review

Weekly Macro Updates

GDP Annualized QoQ (3Q A) 3.3% est., 3.5% actual, 4.2% prior

Personal Consumption (3Q A) 3.3% est., 4.0% actual, 3.8% prior

Core PCE QoQ (3QA) 1.8% est., 1.6% actual, 2.1% prior: R-

U. Of Michigan Sentiment (Oct F) 99.0 est., 98.6 actual, 99.0 prior

Bloomberg Consumer Comfort (Oct 21) 60.1 actual, 60.8 prior

Initial Jobless Claims (Oct 20) 215k est., 215k actual, 210k prior

Continuing Claims (Oct 13) 1644k est., 1636k actual, 1641k prior: R+

New Home Sales MoM (Sep) -0.6%est., -5.5% actual, -3.0% prior: R-

Pending Home Sales MoM (Sep) 0.0% est., 0.5% actual, -1.8% prior: R+

Durable Goods Orders (Sep P) -1.5% est., 0.8% actual, 4.6% prior: R+

Durable Goods ex Transportation (Sep P) 0.4% est., 0.1% actual, 0.3% prior: R+

Markit US Manufacturing PMI (Oct P) 55.3 est., 55.9 actual, 55.6 prior

Wholesale Inventories MoM (Sep P) 0.5% est., 0.3% actual, 0.98% prior: R-

 Strong or Improving

 Inconclusive or lacking trend

 Weak or declining

R+ Revised up

R- Revised down

As expected, the third quarter GDP number of 3.3% showed the economy slowing somewhat from the second quarter’s reading of 4.2%. A fall in net exports was the cause, as imports increased and exports decreased due to anticipated higher tariffs.  Consumer and government spending were positive contributors to GDP in the quarter. The consumer has remained resilient, with consumption, comfort and sentiment releases continuing to show strength although some housing numbers are beginning to show signs of weakness. Manufacturing also continued as an area of strength in the economy with durable goods orders, manufacturing and inventory numbers all showing growth.

Stocks ended the week on a negative note, nearly erasing gains made year-to-date. The S&P 500 was down -3.9%, the Dow down -3.0 % and the Russell indices lost between -3.5 to -4.0%. International markets were also negative, with both developed and emerging markets down over -3.0%. All of the sectors of the market were down for the week, with Energy, Industrials and Financials the largest underperformers. The best performing sector was Real Estate, which was down -1.0%.  Year-to-date, Technology continues to be the best performing sector, up 9.1%; Materials stocks have lagged the most, down -14.8%. Bonds were mostly positive for the week, with the U.S. Aggregate index returning 0.5%. Municipal bonds were up 0.3% while high yield lost -0.7%.