November 16, 2018

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

Geopolitical concerns (Brexit, U.S./China trade tensions) kept intraday stock market volatility elevated and overshadowed the economic data releases, which remained consistent with moderate growth in the near term. Stock market weakness helped push bond yields lower.

Fed Chairman Powell said, “the economy is doing really well,” downplaying concerns about trade policy, the housing market and stock market volatility. He noted that there is “a rising chorus of concern” from businesses about trade policy, but little evidence of a broad impact of tariffs and foreign retaliation on growth and inflation.

Retail sales rose more than expected in October (+0.8%), but figures for August and September were revised lower (implying, all else equal, a downward revision to the 3Q18 GDP growth estimate). The Consumer Price Index rose as expected (+0.3% m/m, +2.5% y/y).

Next week, the economic data releases are likely to be mixed and unlikely to move the financial markets. Durable goods orders are expected to have fallen sharply in October, reflecting a drop in civilian aircraft orders (Boeing reported a decline) and an unwinding of September’s spike in defense aircraft orders. The Conference Board’s Index of Leading Economic Indicators for October should be roughly flat, with drags from the uptick in jobless claims and the drop in the stock market (neither of which is much of a negative for the overall economic outlook). Happy Thanksgiving!


  Last Last Week YTD return %
DJIA 25289.27 26191.22 2.31%
NASDAQ 7259.03 7530.89 5.15%
S&P 500 2730.20 2806.83 2.12%
MSCI EAFE 1807.10 1856.93 -11.88%
Russell 2000 1524.12 1578.21 -0.74%

Consumer Money Rates

  Last 1 year ago
Prime Rate 5.25 4.25
Fed Funds 2.18 1.16
30-year mortgage 4.96 3.97


  Last 1 year ago
Dollars per British Pound 1.277 1.320
Dollars per Euro 1.133 1.177
Japanese Yen per Dollar 113.64 113.06
Canadian Dollars per Dollar 1.318 1.276
Mexican Peso per Dollar 20.231 19.056


  Last 1 year ago
Crude Oil 56.46 55.14
Gold 1215.00 1278.20

Bond Rates

  Last 1 month ago
2-year treasury 2.86 2.87
10-year treasury 3.11 3.17
10-year municipal (TEY) 4.18 4.25

Treasury Yield Curve – 11/16/2018


As of close of business 11/15/2018

S&P Sector Performance (YTD) – 11/16/2018


As of close of business 11/15/2018

Economic Calendar

November 19  —  Homebuilder Sentiment (November)
November 20  —  Building Permits, Housing Starts (October)
November 21  —  Jobless Claims (week ending November 17)
 —  Durable Goods Orders (October)
 —  Existing Home Sales (October)
 —  Leading Economic Indicators (October)
 —  UM Consumer Sentiment (November)
November 22  —  Thanksgiving (markets closed)
November 23  —  Early Market Close
November 27  —  CB Consumer Confidence (November)
November 28  —  Real GDP (3Q18, 2nd estimate)
December 7  —  Employment Report (November)
December 19  —  FOMC Policy Decision (Powell press conference)
January 30  —  FOMC Policy Decision (Powell press conference)
March 20  —  FOMC Policy Decision (Powell press conference)


All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business November 15, 2018.

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