This Week’s Market Snapshot With Loeffler Wealth Management

The May retail sales data remained consistent with moderately strong growth in consumer spending in the near term. Industrial production was boosted by a rebound on the output of utilities and a pickup in auto output in May, but manufacturing ex-autos was flat. The University of Michigan’s Consumer Sentiment Index slipped in mid-June, reflecting concerns about tariffs and slower job growth, but remained relatively high by historical standards.

Ex-food and energy, the Consumer Price Index rose less than expected in May. The report on producer prices showed limited pipeline inflation pressures, but the figures do not fully reflect tariffs. Downward pressure from a softer global economy may be partly offsetting the tariff impact.

Next week, the focus will be on the Federal Open Market Committee meeting. While there is some chance that we could see a rate cut, it’s probably too soon for the Fed to move (a July 31 cut is much more likely). Expect the FOMC to remove the word “patient” from the policy statement, to promise to monitor the situation “closely,” and to “act as appropriate” to sustain the economic expansion. Fed officials will revise their projections of growth, unemployment, and inflation, and we’ll get a refreshed dot plot (senior Fed officials’ expectations of the appropriate year-end target for the federal funds rate). Over the last several months, the stock market has been hypersensitive to minor changes in the Fed policy outlook. Fed Chair Powell will have to work hard to clarify expectations.

Indices

  Last Last Week YTD return %
DJIA 26106.77 25720.66 11.91%
NASDAQ 7837.13 7615.56 18.11%
S&P 500 2891.64 2843.49 15.35%
MSCI EAFE 1879.37 1854.18 9.27%
Russell 2000 1535.80 1503.54 13.88%

Consumer Money Rates

  Last 1 year ago
Prime Rate 5.50 4.75
Fed Funds 2.36 1.89
30-year mortgage 3.92 4.68

Currencies

  Last 1 year ago
Dollars per British Pound 1.267 1.326
Dollars per Euro 1.128 1.157
Japanese Yen per Dollar 108.38 110.63
Canadian Dollars per Dollar 1.333 1.311
Mexican Peso per Dollar 19.195 20.880

Commodities

  Last 1 year ago
Crude Oil 52.28 66.89
Gold 1343.70 1308.30

Bond Rates

  Last 1 month ago
2-year treasury 1.80 2.17
10-year treasury 2.06 2.37
10-year municipal (TEY) 2.54 2.66

Treasury Yield Curve – 06/14/2019

As of close of business 06/13/2019

S&P Sector Performance (YTD) – 06/14/2019

As of close of business 06/13/2019

Economic Calendar

June 17  — Homebuilder Sentiment (June)
June 18  — Building Permit, Housing Starts (May)
June 19  — FOMC Policy Decision
 — Revised Fed Forecasts
 — Powell Press Conference
June 20  — Jobless Claims (week ending June 15)
 — Leading Economic Indicators (May)
June 21  — Existing Home Sales (May)
June 25  — CB Consumer Confidence (June)
June 26  — Durable Goods Orders (May)
July 4  — Independence Day Holiday (markets closed)
July 5  — Employment Report (June)
July 31  — FOMC Policy Decision
September 18  — FOMC Policy Decision

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor’s returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business June 13, 2019.

Market Commentary by Scott J. Brown, Ph.D., Chief Economist

You can reach Loeffler Wealth Management online at http://lwmil.com/

311 E. South Street
Freeport, Illinois
(815) 326-9037

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