Macro View

Daily Insights

  • LPL Research on CNBC. In case you missed it, LPL Research chief investment strategist John Lynch was on CNBC’s Squawk Box this morning talking markets. View the interview here.
  • U.S. imposes more tariffs, China strikes back.  The U.S. announced yesterday that it would impose 25% tariffs on $16 billion in Chinese imports beginning on August 23. In response, China’s Ministry of Finance announced that it would levy 25% tariffs on an additional $16 billion in U.S. goods once the U.S.’s tariffs take effect. Chinese stocks sold off on the news, but the S&P 500 Index’s muted initial reaction indicates these tariffs were expected.
  • JOLTS signal strong job growth. The number of U.S. job openings increased to 6.66 million in June, higher than consensus estimates of 6.63 million and a slight increase from May’s totals, according to the Department of Labor’s Job Opening and Labor Turnover (JOLTS) released Tuesday. June’s total openings are just below April’s record-high 6.84 million openings, indicating (in a vacuum) that future strong U.S. jobs growth is likely. The unemployed-to-open positions ratio is still below 1, indicating that there are enough open jobs for every unemployed participant of the workforce. However, in the Federal Reserve’s latest Beige Book, most districts reported that firms were having difficulty finding skilled labor, complicating efforts to fill these open jobs. The quit rate (voluntary quits as a percent of separations) was unchanged at 2.3%, a 17-year high. An elevated quit rate shows that more employees are being lured away by more attractive opportunities, a trend that could precede a jump in wages.
  • Very early signs of overheating, but still well contained. As we move further into August, temperatures are rising in the economy but still remain below levels that typically trigger recession concerns. Banks surveyed in the Federal Reserve’s Senior Loan Officer Opinion Survey last month indicated they had eased their business lending standards, citing increased competition in the lending space. While froth in the lending space is nowhere near where it was before the financial crisis, the combination of looser lending standards and higher rates may eventually contribute to overheating, but are still at levels we would consider healthy for now. Although we believe the U.S. economy is in the later stages of an expansion, we are not seeing enough excess to signal trouble. According to our Recession Watch Dashboard, there is a low risk of an economic recession starting in the next year.
  • Where is Sell in May? The worst six months of the year for stocks are from May until the end of October, which is also ubiquitously known as the “Sell in May and Go Away” period for investors. Well, the S&P 500 is up approximately 8% since May started. What does it mean when this seasonally weak period is strong? We will take a look at this important question today at noon eastern on the LPL Research blog.

Monitoring the Week Ahead

Click Here for our detailed Weekly Economic Calendar

Wednesday

  • Japan: Core Machine Orders (Jun)
  • China: PPI (Jul)

Thursday

  • PPI Final Demand MoM (Jul)
  • Wholesale Inventories MoM (Jun)
  • Japan: PPI (Jul)
  • Japan: GDP (Q2)
  • China: Money Supply (Jul)

Friday

  • CPI MoM (Jul)
  • CPI YoY (Jul)
  • CPI Ex Food & Energy MoM
  • CPI Ex Food & Energy YoY
  • France: Industrial Production (Jun)
  • UK: Industrial Production (Jun)
  • UK: GDP (Jun)

 

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Index data obtained via FactSet

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