Quarter Ends, Wall Street Nods Approval

by Timothy S. O’Neil, SVP, Trust Investment Officer CFP®, CTFA

The first calendar quarter of 2017 is over and, although the stock market hit some rough sledding toward the end, the major indices such as the Dow Jones Industrial Average and the Standard & Poor’s 500 were each up around 5% as the post-election economy rolls on.

economy, consumer confidence, moderate growth, trump economy, Herring bank, Wealth Management

Consumer Confidence hits 16 year high.

The NASDAQ did even better, closing up 9.9% for the quarter.  Much was made on Tuesday of this week of an extraordinary report on consumer confidence as measured by the Conference Board, which jumped to a sixteen-year high, but it should be remembered that the reading which was announced comes from February, before the new administration in Washington hit some major bumps in the road.  Remember that consumer spending makes up approximately 70% of the U. S. economy;  if the consumer could be cajoled into reaching into his or her pocket more frequently the economy would not be sputtering along at the 2.1% annualized rate at which it was expanding in the fourth quarter of 2016 and since the end of the recession in 2009.  Sometimes sentiment can overcome hard facts but it can also turn on a dime.  Anyway, let’s enjoy the quarter as a positive period for the economy and hope for more of the same for the rest of the year.

FOCUS ON…initial unemployment claims:  Data on the work force is often very difficult to rely on, as the collection process often introduces large distortions.  But initial unemployment claims as a data series is the opposite: a completely unambiguous number.  People who file for unemployment are, well, unemployed; they haven’t left a job for another job, for example.  Keeping track of this weekly number can give the observer a handle on trends in the labor market.  As mentioned above the consumer is the primary driver of the U. S. economy and if there is no paycheck there will be little additional spending.

Weekly Review

MONDAY

Dallas Federal Reserve Manufacturing Survey

  • Production Index (previous, February):          16.7
  • Production Index (March)                                  18.6
  • General Activity Index (previous, February): 24.5
  • General Activity Index (expected, March):     22.0
  • General Activity Index (announced, March): 16.9

TUESDAY

International Trade in Goods (in $billions)

  • Previous (January):                                              -$69.2
  • Expected (February):                                          -$66.5
  • Announced (February):                                      -$64.8

S&P CoreLogic Case-Shiller Home Price Index

  • Previous (December, 2016):                             +0.9%
  • Expected (January, 2017):                                 +0.8%
  • Announced (January):                                         +0.9%

Conference Board Consumer Confidence Index

  • Previous (February):                                            114.8
  • Expected (March):                                               113.5
  • Announced (March):                                           125.6

WEDNESDAY

Mortgage Bankers’ Assoc Mortgage Applications

  • Purchases, previous:                                      -2.0%
  • Purchases, announced:                                 +1.0%
  • Refinances, previous:                                    -3.0%
  • Refinances, announced:                                -3.0%

National Association of Realtors Pending Home Sales Index

  • Previous (January):                                         -2.8%
  • Expected (February):                                     +1.8%
  • Announced (February):                                 +5.5%

(EIA) Petroleum Status Report (in millions of barrels)

  • Crude oil inventories (change for wk ended 3/17):    +5.0
  • Crude oil inventories (change for wk ended 3/24):    +0.9
  • Gasoline (change for wk ended 3/17):                -2.8
  • Gasoline (change for week ended 3/24):            -3.7
  • Distillates (change for week ended 3/17):         -1.9
  • Distillates (change for week ended 3/24):          -2.5

THURSDAY

GDP, Q4, 2016 (3rd and final revised estimate)

  • Previous (second revised estimate):                +1.9%
  • Third revised estimate expected:                    +2.0%
  • Third revised estimate announced:                 +2.1%

Initial Unemployment Claims

  • Previous revised (week ended 3/17):              261,000
  • Expected (week ended 3/25):                           247,000
  • Announced (week ended 3/25):                       258,000

THURSDAY (con’t)

(EIA) Natural Gas Report (in billions of cubic feet)

  • Previous (change for week ended 3/17):       -150
  • Announced (change for week ended 3/24):  -43

FRIDAY

Personal Income

  • Previous revised (January):                                +0.5%
  • Expected (February):                                          +0.4%
  • Announced (February):                                      +0.4%

Consumer Spending

  • Previous (January):                                              +0.2%
  • Expected (February):                                          +0.2%
  • Announced (February):                                      +0.1%

Personal Consumption Expenditures (PCE) Price Index (all items)

  • Previous (January):                                              +0.4%
  • Expected (February):                                          +0.1%
  • Announced (February):                                      +0.1%

Consumer Spending

  • Previous (January):                                              +0.2%
  • Expected (February):                                          +0.2%
  • Announced (February):                                      +0.1%

Personal Consumption Expenditures Price Index (all items)

  • Previous (January):                                              +0.4%
  • Expected (February):                                          +0.1%
  • Announced (February):                                      +0.1%

Personal Consumption Expenditures (PCE) Price Index (core, excluding food and energy)

  • Previous (January):                                                              +0.3%
  • Expected (February):                                                          +0.2%
  • Announced (February):                                                      +0.2%

University of Michigan Consumer Sentiment Index

  • Previous (March “flash” reading):                    97.6
  • Expected (March final reading):                       97.6
  • Announced (March final reading):                   96.9

Baker-Hughes Rig Count

North American rig count

  • (previous, week ended 3/21):                            994
  • North American rig count, actual                     979
  • U.S. rig count (previous, week ended 3/21):  809
  • U.S. rig count, actual                                           824

Gulf of Mexico rig count

  • (previous, wk end 3/21):                                      18
  • Gulf of Mexico rig count, actual                         22

Canada rig count

  • (previous, wk end 3/21):                                     185
  • Canada  rig count, actual                                     155

Source: Wall Street Journal Market Data Center       Not FDIC Insured—May Lose Value—No Bank Guarantee

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