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SLOW WEEK IN THE MARKETS WITH ONE EXCEPTION:

There was very little movement in the markets this past week, except for Wednesday when it went up quickly and came down just as fast ending slightly negative.  On that day, oil prices were increasing and data from ADP indicated that U.S. private sector job creation for March was going to be up about 263,000 (according to the U.S. Labor Department Report later in the week, the number was much lower, see below).  Stocks shot up.  Then the Fed released minutes from an earlier meeting indicating that it was going to continue taking tightening steps (evidently more than the markets want) and Speaker Ryan stated that the House, Senate and White House were still “not on the same page” on tax reform.  Down went stocks.  In the end stocks remained mostly flat.  For this past week, the S&P 500* decreased 0.30% (up 5.21% for the year).  The MSCI All Country X US* decreased 0.50% (up 7.72% for the year).  The Barclays Global Aggregate Bond Index* increased 0.21% (up 1.98% for the year).  The HFRX Global Hedge Fund Index* increased 0.03% (up 1.69% for the year).

HERE COME THE EARNINGS:

First quarter corporate earnings reports will begin to show up in the next week or so.  Investors are expecting average earnings gains of about 6-8%.  Those earnings, and where they fall in relation to that expectation, will be a major driver of the markets in the near term.

LESS THAN EXPECTED:

The U.S. economy added 98,000 jobs in March according to the U.S. Bureau of Labor Statistics report released on Friday.  The Labor Force Participation Rate stayed the same in March (63.0%).  The unemployment rate now stands at 4.5% (down from 4.7%).  This is the lowest rate since the Great Recession.  The broader U-6 rate of unemployment also fell to a post-recession low of 8.9%.

GOOD WAGE GROWTH TREND:

In March, wages were 2.7% higher than a year before.  This statistic is finally showing a good trend after being flat for an extended period of time.

SOMETHING ELSE MIGHT BE GOING UP TOO FAST:

The stock market may have gone up too fast.  Time will tell.  Something else just hit its highest peak since January 2009:  credit card debt.  Total credit card debt in the U.S. passed the $1 trillion in January, up over 6% from a year earlier.  Auto loans and student loans have already crossed the trillion dollar threshold.  The amount of household income needed to pay minimum payments for all debt is about 10%, which is a historically low figure since statistics have been compiled (began in 1980).  This percentage peaked at 13.2% in 2007.  Missed payments and delinquencies on loans are at historic lows, but are on an upward trend.  Rising interest rates will only accelerate this trend.

 

References:

LESS THAN EXPECTED:  http://www.calculatedriskblog.com/2017/04/march-employment-report-98000-jobs-45.html
GOOD WAGE GROWTH TREND: http://www.calculatedriskblog.com/2017/04/comment-mostly-solid-employment-report.html
RUNNING FOR ANOTHER GOOD CAUSE:  https://www.ugandapartners.org/2017/01/emolot-david-allen/
SOMETHING ELSE MIGHT BE GOING UP TOO FAST:  https://www.wsj.com/articles/the-nations-credit-card-tab-hits-1-trillion-1491593929