Global central banks sent strong dovish signals. US Federal Reserve head Jerome Powell discussed the possibility escalating trade risks could lead to rate cuts at a closely-watched monetary policy conference in Chicago. The European Central Bank committed to leave rates unchanged through the first half of 2020 and has started to discuss additional steps.
Global stocks rebounded from a 3-1/2-month low hit in the previous week, boosted by hopes for a Fed rate cut. U.S. tech stocks initially came under pressure on reports the U.S. government had launched its antitrust probes in a few large tech companies. Worries about global growth helped gold, a perceived safe-haven asset, rise to the highest level in more than three months.
U.S. job growth slowed sharply and wage rose less than expected in May, suggesting weakening economic growth.
Rising U.S.-China rivalry is elevating concerns about disruption to global corporate supply chains, and weighting somewhat on stocks. While Trump and Xi delegates meet later this month to continue trade discussions, they are certainly speaking different languages – maybe they should bring in one dad who knows how to communicate.
• Markets have experienced several pullbacks of late, as hoped-for trade war resolutions have not materialized. Still within 4% of all time high’s the S&P 500 is facing headwinds from buffeted technology shares beholden to China and global supply chains for business and growth.
• President Trump signed an executive order banning U.S. telecoms firms from installing foreign-made equipment that poses a threat to national security. The U.S. also added a key Chinese telecom firm to its “entity list,” potentially barring U.S. companies from dealing with it. The White House delayed a decision on whether to impose tariffs on imported cars and parts to allow for more time for trade talks with the EU and Japan. And the U.S. said it would lift steel and aluminum tariffs on Mexico and Canada.
• Crude oil prices rallied on supply squeeze concerns ahead of OPEC discussions over the weekend, and energy stocks outperformed. Saudi Arabia said drones attacked its oil facilities and warned the attacks undermined efforts to resolve Gulf tensions.
• Economic data last week were mostly disappointing. April economic activity data in China surprised to the downside across indicators, while April U.S. retail sales and industrial production came in lower than expected. First quarter gross domestic product (GDP) data for the eurozone and Germany were broadly in line with expectations and suggest a bottoming out of growth in Europe.
• One of the internet’s favorite memes “grumpy cat” passed away. Known as Tardar Sauce in real life, the official Friskie’s spokescat, and source of countless internet memes, died of health issues related to his dwarfism that provided his grumpy look. While disputed by her owners, Grumpy Cat is reported to have made over $100 million during her brief career. My favorite: Your allergic to cats? Good, I’m allergic to idiots.
We saw Marvel’s Endgame last night – a 3 hour extravaganza of heroes rising from the ashes. The parking lot was maxed out, and the film was great, with predictions it will be the highest grossing film ever.
Global stock markets have also been super-heroes rising from the ashes of 2018. Up 15-20% so far this year, it’s the best gains we’ve seen since 1987. we take a look at what we can learn from this recovery.
Stocks climbed substantially for the week. Materials was the top-performing global sector and financials rebounded, while defensive sectors underperformed their peers. Quality was the strongest performing style factor.
Markets digested better-than-expected China Purchasing Managers’ Index data showing manufacturing activity expanded in March at its fastest pace in eight months. A greater-than-forecast March rebound in U.S. hiring, and upward revisions to U.S. business inventories, construction and retail sales data, implied U.S. first-quarter economic activity was more solid than previously expected. Industrial orders in Germany surprised to the downside, extending the trend in recent months of weak eurozone economic data.
The British government requested a further Brexit delay. The presidents of the U.S. and China said their countries made progress on a trade deal, but they did not yet schedule a meeting.
Lyft came public – which will soon be followed by Uber.