Rover's Weekly Market Brief — 4/13/2018

Indices

DJIA: 24,360.00 (+1.78%)

NASDAQ: 7,107.00 (+2.77%)

S&P 500: 2,656.00 (+1.98%)

Commodities

Gold: 1,349.20 (+0.89%)

Copper: 307.00 (+1.04%)

Crude Oil: 67.27 (+8.59%)

Economy

The Producer Price Index – Final Demand (PPI-FD) measure of wholesale inflation for March increased +0.3%, with year over year inflation up +3.0%. A +0.3% increase in service costs accounted for 65% of the increase, with nearly one-third of the service increase due to a +0.2% increase in retail trade margins (+2.0% Y/Y). Goods prices were also up +0.3%, with a +2.2% increase in food costs balancing out a -2.1% drop in energy costs, leaving the monthly PPI-FD excluding food and energy at +0.3%, and pushing the yearly index up by +0.2% to +2.7%. Excluding services, food and energy from the PPI-FD index brought the monthly gain up to +0.4% and the yearly gain up to +2.9%.

A -4.9% decline in the cost of gasoline dropped the Consumer Price Index (CPI) by -0.1% in March, for the first decline in ten months, while yearly inflation rose to +2.4% for the largest 12-month increase since March 2017. Removing the volatile food and energy components brought core CPI inflation to +0.2% for the month, and up by +0.3% to +2.1% for the year. The cost of food remained stable during the month (+0.1%), while the overall cost of energy dropped -2.8% due to drops in prices for gasoline (-4.9%), fuel oil (-4.7%), and piped gas (-1.2%). Costs rose for hospital services (+0.6%), physicians services (+0.2%), motor vehicle insurance (+0.3%), and airline fare (+0.6%), while costs fell for prescription drugs (-0.2%), apparel (-0.6%), communication (-0.3%), and used vehicles (-0.3%). On a yearly basis, shelter costs increased +3.3% (vs. +2.2% 10-year average) and medical costs increased +2.0% (vs. 2.9% 10-year average).

The Federal Open Markets Committee (FOMC) published the minutes from the March FOMC Meeting, including their updated economic projections through 2020. FOMC members noted the growth rate for household spending slowed, but believed it to be transitory, and felt that spending would increase due to high consumer and business sentiment, supportive financial conditions, improved international economies, and recent fiscal policy changes. FOMC members also felt that that labor market would continue to remain strong, and that CPE inflation would stabilize at 2% in the medium term. Respondents to Federal Reserve District surveys in the manufacturing, service, and energy sectors were optimistic, but pointed to continuing shortages in the labor market. However, respondents in the agricultural sector reported a drop in income due to low crop prices, and felt vulnerable to retaliation against U.S. steel and aluminum tariffs.

Upcoming Economic Reports:

Monday April 16 – Retail Sales

Tuesday April 17 – Industrial Production

Earnings Calendar:

 

Monday Tuesday Wednesday Thursday Friday
Bank of
America
(BAC)
Johnson &
Johnson
(JNJ)
Abbott
Laboratories
(ABT)
Taiwan
Semiconductor
(TSM)
Procter &
Gamble
(PG)
Netflix
(NFLX)
UnitedHealth
Group
(UNH)
Morgan
Stanley
(MS)
Novartis
(NVS)
Honeywell
International
(HON)




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