The markets ran the gamut last week. What caused the swings and led to being up 3% on the week?
Politics as usual
The week started much like the prior week had ended, with the talk of tariffs–Set to be 25% for imported steel and 10% for imported aluminum. We also saw the departure of Gary Cohen from the Administration. This news sent the markets south. Word broke mid-week that the GOP was working to soften the Administration’s stance on tariffs. By late in the week, the tariffs were a reality, but with revisions allowing for Mexico and Canada as exemptions. The markets looked favorably upon that decision.
On the surface, job data for February looked boring, sustaining the trend of the last 5 months at 4.1% unemployment. Jobs increased 313,000, giving the markets reason to be excited. In addition, wage growth came in at 2.6%, down from 2.8%. It may seem like a nominal change; however, it was enough of a reduction for investors to feel less concerned about mounting inflation.
The net result of the week was a positive market environment, strong job markets, and tariffs that in the short-term is a strong negotiating stance for NAFTA. In the long run, it will be a net negative impact on the global economy.
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