WEEKLY UPDATE – July 30, 2018
Markets experienced a push-and-pull last week between data indicating strong economic growth and lagging performance from several tech stocks’ earnings reports. Domestic indexes had mixed results, as the S&P 500 gained 0.61%, the Dow was up 1.57%, and the NASDAQ dropped 1.06%. International stocks in the MSCI EAFE had more of an uptick, gaining 1.32% for the week.
On Friday, July 27, we received the initial reading of 2nd quarter Gross Domestic Product (GDP). The report indicated that the economy grew at a 4.1% annual rate between April and June. This reading was the fastest pace in almost 4 years – and significantly higher than 1st quarter growth. Markets, however, had a relatively mild reaction to the GDP data due to rumors predicting even higher results.
Let’s dig beyond the headline GDP growth number to see what else it tells us about our current economic circumstances.
2nd Quarter GDP Details
• The tax cut helped drive growth.The recent $1.5 trillion tax cut contributed to the latest GDP performance. Both consumers and businesses spent more in the 2nd quarter. Some economists believe this result will not last; without further tax cuts, consumers and companies won’t have additional funds at their disposal.
• Trade tension affected GDP.
This year’s ongoing trade drama impacted the economy during the 2nd quarter, but perhaps not the way you might expect. Many soybean farmers tried to get ahead of coming tariffs by shipping their crops to China earlier than normal. This move helped GDP increase between April and June.
• Inflation slowed.
When examining inflation, the Fed uses the personal consumption expenditures (PCE) without food and energy, also known as the core PCE. The 2nd quarter reading was 2%, down from 2.2%. Between healthy economic growth and solid inflation numbers, the Fed is likely still on track for two more rate hikes in 2018.
Seeing strong growth this late in an economic expansion is good news. However, now we will have to see whether the growth can continue at this rate. When discussing the GDP readings, President Trump predicted even better results in future quarters. Some economists, on the other hand, believe trade wars and consumer spending could provide headwinds.
We can’t predict the future, but we do know that economic fundamentals continue to be strong. This week, we will receive a number of new readings – from manufacturing to employment to motor vehicle sales – and earnings season will roll on.
If you would like to discuss any of these details and how they may impact you, we’re ready to help.
Tuesday: Personal Income and Outlays, Consumer Confidence
Wednesday: Motor Vehicle Sales, ADP Employment Report, PMI Manufacturing Index, ISM Mfg Index
Thursday: Factory Orders, Jobless Claims
Friday: Employment Situation, International Trade, PMI Services Index, ISM Non-Mfg Index
Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5- year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
QUOTE OF THE WEEK
RECIPE OF THE WEEK
Corn Wheels with Hot Honey Butter
6 ears of corn, shucked
½ cup unsalted butter, softened
2 teaspoon honey
1 tablespoon habañero hot sauce
Flaky sea salt, for serving
Boil salted water in a large pot. Cut the corncobs into 3-4 pieces each. Put the corn in the pot and let simmer until tender, 3-4 minutes.
At the same time, mix butter, honey, hot sauce, and ½ teaspoon kosher salt in a medium bowl. Place half of the mix in a large bowl and the other half in a serving dish.
Put the corn, after it is drained, in the large bowl with the butter mix. Shake slightly to coat the corn.
Put the corn on a platter and dash with flaky salt. Lightly add hot sauce. Serve the corn with the rest of the butter mixture.
Recipe adapted from Good Housekeeping
Scammers Don’t Take Summer Vacations*
While many of us may be enjoying the summer with vacations and outdoor activities, cyber thieves are busy trying to steal our identities and personal data.
Although it’s been more than three months since the end of the 2017 tax filing season, scammers are coming up with new ploys, such as phishing emails and telephone scams.
The IRS offers several ways to help spot red flags to safeguard your personal information:
The agency does not send pre-recorded messages requesting urgent callbacks. One scam involves warnings that authorities will issue arrest warrants if people don’t respond to calls. Variations include threats of deportation. The IRS doesn’t threaten people with arrest for not paying taxes.
Scammers create fake caller IDs to appear as if the call is originating from anywhere in the country, including from an IRS office. You may call the IRS for information by going to https://www.irs.gov/help/telephone-assistance.
Taxpayers may report unsolicited email to email@example.com. Some people may receive emails from programs linked to the IRS, such as from the Electronic Federal Tax Payment System. Those emails should also be reported to firstname.lastname@example.org.
The IRS doesn’t contact taxpayers by email to get personal or financial information. The agency uses the U.S. Postal Service to make initial contacts.
The IRS will call or visit taxpayers at their homes or businesses only on special occasions, which may include overdue tax bills or obtaining delinquent tax payments.
Other details may apply, and you can find more information on the IRS website.
Hit a Draw in 5 Minutes
Many golfers, coaches say, can’t help hitting those irritating slices, those sometimes wayward, left-to-right shots (for right-handed players). Most players would prefer to hit draws (right to left), the shots over which they have more control. Slices are unpredictable.
With a few simple adjustments to your swing, golf coaches say you can easily change slices into draws.
The hands: First, take a stronger grip on your club. Second, place the club handle in the base of your fingers and not angled in your palm. Gripping the handle in the fingers enables you to retain more control of your swing.
The path: To develop draws and to avoid slices, focus on your backswing. Players who hit slices often have clubfaces facing down at the height of the backswing. To hit a draw, make sure your clubface is pointing skyward and your arms are behind you. Slicers generally hold the club in the backswing in front of their bodies.
The finish: End your swing on the toes of your trail foot. Finish the swing with your chest facing the target.
Tip adapted from GolfDigest 
Listen to These Tips on Ear Infections
• Trouble hearing
• Fluid oozing from ears
• Stuffy nose
Tips adapted from WebMD
Close the Door Campaign to Keep It Cool
The national campaign Keep It Cool urges consumers to help persuade retailers to close their physical doors during hot summer days to help preserve energy.
Tip adapted from EarthShare
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