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Weekly Market Update for April 5, 2019

by JM Hanley

The Dow was up on Friday, rising 40 points to close at 26,425. For the week, the Dow was up 1.9% (SP500 +2.1%) and year-to-date is now up 13.3% (SP500 +15.4%). The yield on the 10-year Treasury (an important interest-rate indicator) rose nine basis points, closing at 2.50%.

The most important event of the trading week came before it officially began. Chinese manufacturing data for March, released Sunday, showed the economy has recovered nicely from a swoon late last year. Beijing’s efforts to stimulate the economy seem to have paid off. Manufacturing readouts from the US, released the next day, also looked good. Europe remains a laggard. Friday’s jobs report was just the way Wall Street likes it: businesses added jobs (indicating they’re confident about the economy) but wages didn’t rise much (giving the Fed few incentives to raise interest rates). However, it didn’t much impress the market. Unemployment is already quite low, and most assume the US economy is healthy. It’s the rest of the world they’re worried about.

The price of crude oil rose 5% this week to $63 a barrel – up 39% YTD. US crude stockpiles showed a greater-than-expected build – of 7.2m barrels – while product inventories of gasoline (-1.8m bls) and diesel (-2.0m bls) both fell. Oil demand benefitted from positive US-China trade negotiations as well as stronger Chinese manufacturing data for March. On the supply side, rising conflict in Libya amongst two competing forces could put additional supply at risk. Shares of US domestic producers rose 4% on the week, but trail the commodity YTD by 19%. This gap started in early February, widened in early March; however, we believe some “catch up” is now in order.

Next Wednesday will be a banner day in Europe. The docket of Brexit news looks heavy once again. Brexit is only important to US firms inasmuch as it contributes to Europe’s already tepid growth. US firms would feel the aftershocks of a particularly abrupt departure; anything less is likely immaterial. The European Central Bank will also meet Wednesday. US inflation data will come mid-week, as will the minutes of the Fed’s March meeting.

*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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