Economic Data and Market Highlights
The past trading week was abbreviated in the US as Juneteenth, the day slavery ended, was commemorated. Retail sales announced Tuesday came in below expectations, with the Core Retail number falling 30 basis points while the estimate was for an increase of 20 basis points. “Core Retail” excludes automobile sales. The aggregate retail result, which includes auto,s dropped 90 basis points while the estimate was for a 50 basis point drop. The Fed met Wednesday, and as widely expected, left rates unchanged. Aside from the retail data, trading was lighter and relatively quiet, with the Dow 30 rising just seven basis points and the S&P 500 falling 12 basis points.
The Russell benchmarks are in the midst of their annual reconstitution. Ranking by market capitalization for the benchmarks began in April with periodic updates being released since, the latest being Friday. The newly reconstituted indexes will take effect June 27 so some volatility may be expected in names that fall in or out of a capitalization-weighted or a growth/value benchmark.
Israel began bombing Iran on June 12th and has taken control of Iranian airspace. There has been much speculation that the US may enter the fray, seeing it as an opportunity to end Iran’s nuclear program. The Trump Administration noted that Iran failed to respond to it’s 60th request to begin talks and the president stated on Thursday that he would make a decision within two weeks. That decision came Saturday June 21st, when the US bombed three suspected nuclear enrichment locations, with 30,000lb “bunker buster” bombs that are intended, as the name indicates to destroy enemy operations below ground. At the time of this writing, Iran’s parliament has voted to close the Strait of Hormuz but analysts question if they have the ability and/or the authority to do that. There have been recent cases of jamming radar which could make it difficult to navigate. Why is the Strait of Hormuz important? Roughly 20 million barrels of oil flow through the Strait daily which represents about 1/3 of the global maritime oil trade and 20% of global consumption.
The Past Week’s Notable US data points (with revisions)
The Upcoming Week’s notable US data points
Source: Morningstar
Data Source: Financial News London, Financial Times, Morningstar, MarketWatch, Standard & Poor’s, and the Wall Street Journal.
Authors:
Jon Chesshire
Michael McNamara