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Aug 30 2018

8/30/19 Market Notes

Stocks set another record high on Wednesday as technology shares and the NSDAQ gained nearly 1% as 8 of the 11 sectors of the S&P ended up. Investors were encouraged by the second reading of Q2 GDP, which showed the U.S. economy had grown by 4.2%, its strongest pace in 4 years. Gains were suppressed by a disappointing Pending Home Sales report, which showed activity falling for a seventh month in a row, declining 2.7% from a year ago. While the figure may seem small, the decline is meaningful and is seen by some as an indicator of broader issues to come.

Overnight, international bourses gained ground, following the U.S.’s footsteps, as the U.S. dollar strengthened slightly causing oil prices to appreciate as well. Treasury yields remained relatively flat, as market participants for today’s Income & Spending data and more importantly the latest inflation data, which might sway the Fed in their policy direction.

U.S. equity futures are pointing to a lower open this Thursday morning, on what is most likely profit taking, although some are citing stressed trade negotiations as the catalyst. Earlier this week the United States and Mexico announced an agreement for a new trade deal that would replace NAFTA And late yesterday, Canada “agreed” to rejoin the talks after White House Economic Advisor Larry Kudlow stated that Canada may face auto tariffs if it did not agree to a “fair deal.” Although continuing negotiations, neither China nor Europe appear close to an accord with the United States. To Wit: Early this morning China’s commerce ministry said that the current trade negotiations can only proceed and be successful if both nations approach and recognize each other as equals, adding (according to Reuters) “China will stick to the steady opening of its economy regardless of U.S. actions.”

Sincerely,
The GGFS Investment Committee