Week of September 23 - 27, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

October 3, 2019

Weekly Economic Review

Weekly Macro Updates

GDP Annualized QoQ (2Q T) (2.0% est., 2.0% actual, 2.0% prior)
Personal Consumption (2Q T) (4.7% est., 4.6% actual, 4.7% prior)
PCE Core Deflator (Aug P) (1.8% est., 1.8% actual, 1.7% prior: R+)
Markit US Manufacturing PMI (Sep P) (50.4 est., 51.0 actual, 50.3 prior)
Markit US Services PMI (Sep P) (51.4 est., 50.9 actual, 50.7 prior)
Durable Goods Orders (Aug P) (-1.1% est., 0.2% actual, 2.0% prior)
Conf. Board Consumer Confidence (Sep) (133.0 est., 125.1 actual, 134.2 prior: R-)
Conf. Board Expectations (Sep) (95.8 actual, 106.4 prior: R-)
U. of Mich. Sentiment (Sep F) (92.1 est., 93.2 actual, 92.0 prior)
U. of Michigan Current Conditions (Sep F) (108.5 actual, 106.9 prior)
U. of Michigan 1 Yr. Inflation (Sep F)  (2.8% actual, 2.8% prior)
Initial Jobless Claims (Sep 21)  (212k est., 213K actual, 210k prior: R+)
Continuing Claims (Sep 14)(Sep) (1666k est., 1650K actual, 1665k prior: R+)
New Home Sales (Aug) (659k est., 713k actual, 666k prior: R+)
 

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

Directional change based on general
long-term tends.

Capital Market Implications

Last week’s releases highlighted a slowing domestic economy and consumer in the face of falling global growth and ongoing trade tensions. Manufacturing numbers rebounded to a five month high in the US, although internationally, output and purchasing manager indices were down significantly. Consumer-related releases were mixed as confidence and retail sales were down but new and pending home sales increased, boosted by lower mortgage rates. Employment remains strong and disposable income is increasing, which should bolster consumers as the holidays approach. Inflation has remained low, with University of Michigan releases highlighting expectations for muted inflation going forward.

Stocks ended lower for a second week, with the S&P 500 down -1.0% and the Dow losing -0.4%, as trade issues continued to dominate headlines. Small cap stocks were harder hit, with the Russell 2000 returning -2.5% for the week. In spite of being negative, value outperformed growth, down -0.6% versus -1.5%. International stocks were also negative for the week, as developed markets were down -0.6%. Emerging markets were weaker, losing -1.9%. Bond markets were generally positive for the week, with the aggregate index gaining 0.4%. Corporate and municipal bonds returned 0.5% and 0.3% respectively. High yield bonds, which are more correlated with stocks, were down -0.3%.