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Weekly Market Update for April 27, 2018

by JM Hanley

The Dow was down on Friday, falling 11 points to close at 24,311. For the week, the Dow fell 0.6% (SP500 unchanged) and year-to-date is now off 1.7% (SP500 -0.1%). The yield on the 10-year Treasury (an important interest-rate indicator) was unchanged, closing at 2.96%. It traded above 3.0% for part of the week, its highest point since 2013.

America’s economy is still running hot. GDP grew 2.3% in the first three months of the year, the fastest since 2015. Businesses added to inventories, but growth in exports, residential real estate, and government spending all slowed. Wages are up about three percent from last year. With their pay envelopes fattened, American consumers professed to feel better about the economy in March and April than they had since 2004.

The price of crude oil was unchanged this week at $68 a barrel – up 13% YTD. US crude stockpiles showed a surprise build this week of 1.5m barrels, while product inventories of gasoline rose (+0.8m bls) and diesel fell (-2.6m bls). Despite the somewhat weak crude report and some unplanned refinery outages this week dampening demand, crude oil managed to stay on a neutral footing.

In Venezuela, Chevron withdrew remaining ex-pat executives, and told some additional workers not to return to work, after the government arrested two employees. In Saudi Arabia, the government is now leaning towards 2019 for the Saudi Aramco IPO in the hope that the local exchange, the Tadawul, can get a better global classification, which could boost trading and valuations. This may elongate the need for OPEC to support the price of oil by restricting production.

A flurry of first-quarter earnings reports kept analysts busy this week. Amazon’s sales continue to grow at a torrid pace. The company’s recent focus on its more lucrative businesses paid off in record profits this quarter. That situation was reversed at Google. Pricey forays into cloud computing, robotics, and self-driving cars cost the firm on its bottom line. Shares of Facebook rose nine percent after the social media behemoth reported that users remained engaged and advertisers eager despite the bad press surrounding its data privacy practices.

Outside of tech, high gas prices, a weak dollar, and a booming global economy helped Visa outdo Wall Street’s expectations. Those same trends didn’t do 3M any favors. Higher transportation and raw material expenses prompted the firm to cut its 2018 earnings estimates. Apple, Granite Construction, Anadarko Petroleum, and Devon Energy, among others, will report earnings next week.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss

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