Market Update: Wed, Mar 27, 2019 | LPL Financial Research

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Daily Insights

Trade deficit shrinks as U.S.-China talks set to resume. Monthly U.S. figures showed the trade deficit narrowed in January to $51.1B, while December data was revised up by $0.1B to -$59.8B. Imports of both goods and services declined, while overall exports increased. The gap between the U.S. and China narrowed month over month, but the longer term trend remains negative. The data come as top U.S. trade officials gear up for another trip to Beijing on Thursday, with President Trump telling Republican lawmakers recently that he will not accept anything less than “an excellent deal.” We don’t expect market-moving progress this week, though we remain optimistic on a resolution coming in the relatively near future.

China firms see profits drop, government shifting stimulus focus. Data show profits for Chinese industrial firms fell 14% year over year in the first two months of 2019, the largest drop since 2011. The data follow an earlier release showing income growth for state-owned enterprises decelerated to +10% in the same period as demand slows at home and abroad. Still, China’s Beige Book showed “an unmistakable recovery” in the first quarter after a weak end to 2018, helped by a resumption in credit growth. Looking ahead, the Peoples Bank of China is expected to tap the brakes on monetary policy support over the balance of the year as government officials shift their focus in favor of fiscal stimulus measures.

Some good news. As the global slowdown continues and various yield curves invert, many are worried about a recession starting soon. And some of the coincident indicators like consumer spending, capital expenditures, and industrial production have been quite weak – adding to these concerns. On the flipside, is leading economic indicators like copper, money supply, and services have all decidedly improved since the December lows. Today on the LPL Research blog we will take a look at one of our favorite leading indicators that indeed suggests a recession might not be as imminent as some suggest.

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Wednesday

  • Trade Balance (Jan)

Thursday

  • GDP Report (Third Revision, QoQ Q4 2018)
  • Initial Jobless Claims (March 23)
  • Pending Home Sales (MoM, Feb)
  • Eurozone Economic Confidence Index (Mar)
  • Germany CPI Report (Mar)
  • Japan Jobless Rate (Feb)
  • Japan Tokyo CPI Report (Mar)
  • Japan Industrial Production (Preliminary Feb)
  • Japan Retail Sales (Preliminary Feb)

Friday

  • Core PCE (MoM Jan)
  • New Home Sales (MoM Feb)
  • University of Michigan Sentiment Index (Mar)
  • Germany Unemployment Claims Rate (Mar)
  • UK GDP Report (Q4 2018)
  • Eurozone CPI Report (Mar)
  • Canada GDP Report (Jan)

 

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