There has been a lot of economic data released the last week, almost all of it constructive for the economy and company earnings. The U.S. economy keeps chugging along briskly, Europe is not as strong, but growing, and inflation remains tame. Some would call that a "Goldilocks" scenario for the economy and stocks. All that, and more in this week's articles.
Enjoy this week's The Friday Buzz, and have a great weekend!
- The U.S. Economy Grew Stronger Than Expected in Q1: Last week's GDP came in at 3.2%, much stronger than the consensus estimate of 2.5%. This number can still be revised, but probably won't be drastically changed. This bodes well for the economy, since in the recent past, Q1 has lagged other quarters in growth. And this week the Euro Zone reported Q1 GDP at 0.4%. Though tepid compared to the U.S., that number was in the upper range of expectations. So economic growth continues.
- The Fed Holds Steady: The Fed decided to hold the line on short-term rates this week. Fed Chair Jay Powell stated there's no strong case for moving rates in either direction.
- Inflation Still Contained: The inflation reported for March showed a moderate 1.5% increase. Inflation is showing no signs of galloping away despite a solid economy and continued reports on strong job growth.
- U.S. – China Trade Talks: This week, progress was made on trade negotiations between China and the U.S. A trade deal would remove another uncertainty in the markets. There's always the chance the deal falls apart, as the Trump administration is pushing to complete a deal by mid-May or walking away.
- The New King of U.S. Trading Partners - Mexico: With all the focus on China trade, it was hardly noticed that so far this year Mexico leapfrogged both China and Canada to become the top trade partner of the U.S. This is despite challenges presented by renegotiating NAFTA.
- Seaweed Pod Anyone? Runners in last Sunday's London Marathon had an innovation waiting for them at mile 23. Instead of using plastic bottles to rehydrate, runners were offered seaweed pods of a sports drink. This helped eliminate thousands of plastic bottles. The makers of the pods eliminated any taste, smell, or even green color from the seaweed, making the pods neutral tasting. And if the runners didn't eat the pods, they are biodegradable.
- Graduation Time is Here: Many of us will be attending graduation ceremonies this May and June. I'm always amazed at how quickly the time goes. It's never too late to prepare for the day they leave for college. Tracey wrote about her experiences preparing for college for her two kids. Grandparents can get in on the act too, and here are some strategies to consider for helping to fund college.
- Trump News is Not Affecting the Markets: Bob Mueller has written to Congress that Attorney General William Barr's assessment of the Special Counsel's report did not fully capture the findings. Much of the focus is on whether President Trump obstructed justice. Also this week, the President and his children filed lawsuits against Deutsche Bank and Capital One to prevent them from issuing financial records subpoenaed by Congressional committees. It is difficult to gauge where these stories lead. Some long-time DC observers feel the money trail could eventually trip up President Trump, but so far the markets have shrugged and focused on the economic news.
- The Democratic Presidential Field is Ever Expanding: Joe Biden entered the Democratic presidential primary race. There are now 23 folks running for the Democrats. Now that it looks like the field is set, does it matter who the front runner is with the primary election so far off? One analysis concludes that even early in the race, polling is fairly predictive of who will eventually win.
- Drones Are Planting Trees? It's always fascinating to see how new technology can be used in ways not initially realized. There are projects now underway to utilize drones to help plant trees, grasses and coastal mangroves. In one case study, two operators working with ten drones were able to plant 400,000 trees in one day!
- Credit Lending and the Yield Curve: The financial news has been focused on the yield curve and if it is inverting or not. But the yield curve inverting is all about bank lending and credit. If the yield curve is inverted, banks are less incentivized to lend, slowing the economy. It would be better to track credit lending as opposed to using the yield curve but as this article points out, tracking lending is not easy.
- Beyond Meat IPO: Plant-based meat alternatives have been going mainstream the last few years. This week, one of the leaders in the space, Beyond Meat, had it's IPO on Thursday with symbol BYND. Early investors in Beyond Meat were Bill Gates and Leonardo DiCaprio. We love Beyond Burgers in our house, and with summer around the bend, we'll probably be having some soon!
Have a great weekend!