Statistic of the Week:
A recent study showed that $97 trillion is needed in global infrastructure by 2040, and reserves are projected to be short by $18 trillion. China will have the largest demand for projects at $28 trillion. The US will have the largest shortfall in total, $3.8 trillion. Poorer countries have larger gaps as a percentage of spending.
OPEC had a meeting in St. Petersburg last week, where sharp criticisms were noted for member states that were slow to meet their commitment to reduce oil supply. Saudi Arabia’s energy minister said there would not be any “free rides,” as Ecuador became the first nation to pull back from the pledge to cut production.
Market Moving Events:
Monday: Pending Home Sales Tuesday: Personal Income and Outlays, ISM Manufacturing Index, Construction Spending Wednesday: Petroleum Status Report Thursday: Jobless Claims, Factory Orders, ISM Non-Manufacturing Index Friday: Employment Situation, International Trade
Continuing the theme that has been in place since the start of the year, technology companies dominated market news last week. In trading, tech lagged, dragging the NASDAQ lower, down about -0.19%.1 The S&P 500, with a mix of traditional companies and tech innovators, ended the week dead even.2 And the DJIA, primarily composed of the “old guard,” ended the week up 1.17%,3 certainly a reversal of a recent trend. Treasury yields moved up slightly. The 10-year Treasury closed Friday with a yield of 2.30%.4 During the second quarter, US GDP grew 2.6%, for an annualized rate of 2.1% (chart right).5 The figure was below analyst expectations; lack of movement on the Affordable Care Act, tax reform, and overall smaller fiscal stimulus than expected are being blamed for the miss.6 While the US economy did not meet analyst expectations, corporate earnings have been exceeding them. With about half of companies reporting, 73% have surpassed revenue expectations. This is the highest rate in almost a decade.7 Strong corporate earnings are needed to justify increasingly lofty stock valuations. Oil prices have also been a topic of discussion as of late. The commodity rallied every day last week, and is hovering around $50/barrel.8 With tensions mounting within OPEC (see Global Perspective), it will be curious if the larger oil producing nations will be able to keep other member states in check and maintain prices at their desired levels. - Dan McElwee, CFP®
Chart of the Week: