Market Update: Thurs, May 30, 2019 | LPL Financial Research

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Daily Insights

GDP’s first revision. Gross domestic product (GDP) rose 3.1% in the first quarter, according to the first revision, lower than the initial reading of 3.2%. Consumer spending’s contribution was revised up 0.1%, while net exports and inventories were revised down approximately 0.1%. However, business spending contribution to GDP was cut about 0.1%. Overall, GDP growth excluding inventories and trade impacts remained at 1.5%, the weakest “real final sales” growth since the end of 2015. Overall, we still expect economic growth to moderate from the first-quarter print, but we think consumer and business spending may shoulder more of this year’s output growth.

Futures higher as trade tensions remained in the spotlight. There is nothing particularly incremental and meaningful, as market participants remain in a waiting game until the G20 meeting in Japan gets closer. Bond market also in focus amid softening global growth backdrop, heightened geopolitical tensions, falling Treasury yields and the related inversion of the 3-month/10-year yield curve.

U.S. and EM continue to stand out in a low growth world. The strongest economic growth in the world has been coming from the emerging world for quite some time, and among major developed nations, United States has been the clear leader. That dynamic is not changing. In fact, since March, growth expectations in Europe and Japan have fallen, emerging market (EM) growth expectations have held steady, and growth forecasts in the United States have actually risen. Our expectation for an eventual U.S.-China trade agreement underlies are continued preference to focus equities allocations in the U.S. and EM.

Time for a June Swoon? We are wrapping up what will likely be the first negative month of the year for the S&P 500 Index, and likely the worst May since 2012. Here’s the bad news, we are entering the historically weak month of June. Looking at recent history, June is the second worst performing month of the year over the past 20 years, with only September worse. Later today on the LPL Research blog we will take a closer look at this phenomena and what it could mean as the summer officially kicks off.

NEW Street View video. Chief Investment Strategist John Lynch shares his perspective about the trade war with China and how it is taking longer than expected. Watch and share the video now.

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Thursday

  • GDP Report (First Revision, Q1 2019)
  • Initial Jobless Claims (May 25)
  • Pending Home Sales (MoM, April)
  • Japan Jobless Rate (Apr)
  • Japan Tokyo CPI Report (May)
  • Japan Industrial Production (Preliminary, Apr)
  • Japan Retail Sales (Apr)
  • China Manufacturing PMI (May)

Friday

  • Personal Income (MoM Apr)
  • Personal Spending (MoM, Apr)
  • Core PCE (MoM Apr)
  • University of Michigan Sentiment Index (May)
  • Japan Consumer Confidence Index (May)
  • Germany CPI Report (Preliminary, May)

IMPORTANT DISCLOSURES

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Index data obtained via FactSet

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