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March 18 – March 22 Week in Review

The markets initially moved higher last week but ended up closing lower after a sharp sell-off on Friday as global growth concerns re-emerged spooking investors. The S&P 500 lost 0.77%, the Dow Jones Industrial Average lost 1.34%, the Nasdaq Composite lost 0.60% and the Russell 2000 turned in the worst performance with a steep loss of 3.07%.

The S&P 500 financial sector was the week's outright laggard, pressured by concerns that the flat yield curve will lead to weak net interest margins for lenders. Conversely, the consumer discretionary, real estate, and consumer staples sectors outperformed.

On Wednesday, the Federal Open Market Committee left the target range for the fed funds rate unchanged at 2.25-2.50%; signaled that it does not expect any more rate hikes in 2019 versus two rate hikes expected at the time of the December 2018 meeting; and said it will begin tapering its balance sheet runoff in May with an end date of Sept. 30th.

The Fed's pivot to an even more dovish mindset made it clear that the market doesn't have to fear the Fed like it did in the fourth quarter. At the same time, however, some viewed the pivot as a dim outlook for economic growth that won't translate well for earnings growth.

Nevertheless, the indication for no rate hikes in 2019 (and only one in 2020) sent U.S. Treasury yields noticeably lower across the curve, which was further accentuated by global growth concerns. For the week the 2 year yield dropped 12 basis points to 2.32%, and the 10 year yield dropped 13 basis points to 2.46%.

Growth concerns were reinforced by an earnings warning from FedEx, disappointing manufacturing data out of Europe, and declining exports out of Japan and South Korea. FedEx called attention to slowing international macroeconomic conditions and weaker global trade growth trends. Nike didn't help ease concerns after reporting underwhelming growth in North American sales when it reported earnings.

In overseas developments China confirmed trade negotiations with the U.S. will continue in Beijing this week and in Washington in early April. EU leaders offered to delay the Brexit date until May 22nd if British lawmakers approve Prime Minister Theresa May's deal this week.

In other markets last week the U.S. Dollar Index increased 0.1% to 96.65 and WTI crude increased 0.8% to $59.01 a barrel.

March 25 – March 29 Economic Calendar

  • Monday
  • Chicago Fed National Activity Index
    8:30 AM ET
  • Dallas Fed Mfg Survey
    10:30 AM ET
  • Tuesday
  • Housing Starts
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • S&P Corelogic Case-Shiller HPI
    9:00 AM ET
  • FHFA House Price Index
    9:00 AM ET
  • Consumer Confidence
    10:00 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • International Trade
    8:30 AM ET
  • International Trade in Goods [Cancelled]
    8:30 AM ET
  • Current Account
    8:30 AM ET
  • Retail Inventories
    8:30 AM ET
  • Wholesale Inventories
    8:30 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Thursday
  • GDP
    8:30 AM ET
  • Jobless Claims
    8:30 AM ET
  • Corporate Profits
    8:30 AM ET
  • Pending Home Sales Index
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Farm Prices
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
    • Friday
    • Personal Income and Outlays
      8:30 AM ET

       

       

    • Chicago PMI
      9:45 AM ET
    • New Home Sales
      10:00 AM ET
    • Consumer Sentiment
      10:00 AM ET
    • Baker-Hughes Rig Count
      1:00 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This commentary is a matter of opinion and is for informational purposes only. It is not intended as investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. The statements contained herein are based solely upon the opinions of Telemus Capital, LLC. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.

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