Sunday, May 15, 2016

Weekly MAD Economic Review

The market had a stronger start to the week only to find itself finish on a down note. For the week the S&P 500 lost 0.5% making this the third losing week in a row. I'm not overly concerned for the market as it climbed straight up for 10 weeks from the February lows. So a breather is warranted. Earnings season is pretty much over with as over 90% of companies reporting.


This week was a little light on economic reports. Initial claims for unemployment came in a bit higher than expected this week at 294K vs expectations of 270k. This is on top of the lackluster 160k new jobs reported the week before coupled with a few downward revisions to prior numbers. Also retail sales for April came in with a better than expected 1.3% increase from the prior month, and up 3.0% from April 2015. That's a pretty good number.  Also this time of year many people get their income tax refund checks so let's see if the strength can continue into summer.

What can I say. The job market continues an 8 year trend of absolutely sucking for many people. Although it's evident people with jobs are still looking to spend their money. I think that's proven with Amazon hitting a brand new all time high this week while plenty of other retailers are taken to the woodshed.  If your retail business does not have a special niche it appears the heat is on immensely right now as consumers increasingly buy bargains.  It seems pretty evident when you look at the charts of companies like Macy's, Nordstrom, Dick's, The Buckle, and JC Penney. They are all heading down.  Some companies dodging the Amazon freight train so far have been Costco Wholesale, Ross Stores,  and TJX Company.

There were a few Fed officials that gave speeches this week.  Some mentioned a June rate hike is not out of the question.  The market seems to disagree, but that does not mean they won't raise rates to everyone's surprise. If they do raise rates in June I think we won't see another hike until after the elections.  I still think this will be a gradual and slow shift back to normalization. Although it might be a choppy trend at times.

Here is how the major indexes performed for the week along with the YTD performance.
Index
Started Week
Ended Week
Change
% Change
YTD %
DJIA
17740.63
17539.77
-200.86
-1.1
0.7
Nasdaq
4736.16
4718.89
-17.27
-0.4
-5.8
S&P 500
2057.14
2047.10
-10.04
-0.5
0.2
Russell 2000
1114.72
1102.30
-12.42
-1.1
-3.0

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