Week In Review 2.8.2019

February 9, 2019

Week in Review

Week Ending: February 8, 2019

Recap & Commentary

After their best January since 1987, equity markets struggled to maintain momentum in the face of renewed concerns about trade and global growth.

On Thursday, markets sold off on news that President Trump and Chinese President Xi are unlikely to meet before the March 1, when U.S. tariffs on $200B of Chinese goods are set to rise from 10% to 25%. Until a final deal is negotiated, markets will likely remain susceptible to reports and rumors surrounding the ongoing trade talks.

The EU exacerbated concerns about global growth, Bank of England and Bank of Australia all downgrading their 2019 economic forecasts. The EU now expects 2019 growth to be 1.3%, down from its November forecast of 1.9%.

Through Friday, 66% of companies within the S&P 500 had reported fourth-quarter earnings. Thus far, 71% of companies have beaten their earnings estimates, while 62% have beaten their revenue estimates. For the quarter, earnings growth is tracking at 13%, which would mark the 5th consecutive quarter of double-digit earnings growth. Looking ahead to first-quarter 2019, according to industry group FactSet, analysts now expect earnings to contract by -1%. That compares to an estimate of 6.7% at the end of September. Expectations of slowing global growth, a strong U.S. dollar, and concerns about China have all been cited as factors for the reduced earnings estimate.

Economic Bullet Points

New Factory Orders fell an unexpected -0.6% at both the headline and core (excluding aircraft) levels in November, as trade uncertainties caused firms to become more cautious. Further, many firms built up inventories ahead of tariffs last year, but don’t seem to have replenished stocks ahead of a potential March 1 tariff increase, leading to speculation that firms are now less prepared.

US Services—Both the ISM and PMI non-manufacturing flash reports for January pointed to slowing in the services sector, but with index levels at 56.7 and 54.2, respectively, the economy appears to be expanding at a still solid rate.

International Trade—The U.S. trade deficit narrowed sharply from $55.7B in October to $49.3B in November. Although exports fell $1.3B, the overall trade deficit narrowed because imports decreased by almost $8B.

Consumer Credit growth remained steady, up $16.6B in December following a $22.4B upward revision in November. Nonrevolving credit (auto and student loans) rose $14.8B vs. a $17.6B increase in the prior month. But revolving credit (credit cards), rose only $1.7B vs. November’s $4.8B.

Jobless Claims came in at a higher than expected 234K, despite a 19K drop in new claims as previously furloughed government workers got back to work. In sum, unemployment claims are trending higher, but only modestly.

*Productivity and Costs data is not yet available because of the government shutdown.

Of Note

BBT&T announced plans to acquire SunTrust Banks for ~$28B, marking the largest bank merger since the financial crisis. If approved, the deal would create the 6th largest retail bank in the U.S.

Market Indices Week of 2/08

S&P 500                         0.0%

Small Caps                     0.3%

Intl. Developed             -0.4%

Intl. Emerging              -0.8%

Commodities                -1.1%

U.S. Bond Market            0.3%

10-Year Treas. Yield         2.63%

US Dollar                          1.1%

WTI Oil ($/bl)                      $53

Gold ($/oz)                     $1,314

The Week Ahead

  • CPI/PPI
  • Retail Sales
  • Industrial Production
  • NFIB Small Business Optimism Index
  • Consumer Sentiment
  • Jobless Claims

First Western Trust

1900 16th St., Suite 1200 Denver, CO 80202
Phone: 303-531-8100
Website: www.myfw.com

Colorado: Aspen | Boulder | Cherry Creek | Denver | Denver Tech. Center | Ft. Collins

Arizona: Phoenix | Scottsdale

Los Angeles, CA: Century City

Wyoming: Jackson Hole | Laramie

Insights

Week in Review: November 29, 2024

Recap & Commentary Markets ended the week higher with the S&P 500 and Dow Jones Industrial Average both ending at […]

Learn more

Optimizing Cash Flow for Business Growth in the Coming Year

Effective cash flow management is fundamental to supporting sustainable growth, especially as we approach 2025. Whether you are looking to […]

Learn more

Week in Review: November 22, 2024

Recap & Commentary Markets ended the week higher as investors evaluated President-elect Trump’s various cabinet nominees and a number of […]

Learn more

November 2024 Market Commentary

Donald Trump wins the Presidential election. 3Q GDP expands at 2.8% annualized pace. October nonfarm payrolls add 12K jobs. Returns: […]

Learn more

Strategic Charitable Giving: How to Maximize Impact While Minimizing Tax Liability

Partaking in charitable giving is a wonderful way to support the causes that matter most to you. In addition to […]

Learn more

Ready to learn more?
Let’s have a conversation.

Embark on a banking experience tailored to your distinct path, focused on achieving personal and business financial prosperity.