Even though the market remains relatively solid for 2018, exchange-traded funds continue to suffer. U.S.-listed ETFs posted net monthly outflows in June for a third month in 2018, according to the latest U.S. ETF Flash Flow report from State Street Global Advisors.
This is the greatest number of months with outflows in any year since 2008, and we are only halfway through 2018, the report says. If the year has just one more month of net outflows, 2018 would tie the record of four such months, reached a few times in the late nineties.
According to the report, international and emerging market funds have been hurt the worst, registering their largest back-to-back months of outflows since the start of 2016. International equities saw outflows totaling $3.3 and $9.9 billion in May and June, respectively.
Tuesday, July 10, 2018
Monday, July 9, 2018
The Downside to Low Unemplyoment
As the economy teeters at full employment, rising wages are beginning to eat into the profits of some U.S. companies. That’s good news for U.S. workers, but the steady rise in wages poses a threat to U.S. companies after a streak of double-digit quarterly profit growth that has helped underpin the broader stock market.
Economists at Goldman Sachs predict that every percentage-point increase in labor-cost inflation will drag down S&P 500 earnings by 0.8 percent. In total, labor costs amount to 13 percent of revenue for S&P 500 companies.
The industrials sector is most susceptible to increasing wages, Goldman reports. Those companies have a 21 percent ratio of labor costs to revenue, the most out of the S&P’s 11 sectors. The consumer discretionary sector, the S&P’s best-performing sector this year, is also likely to take a hit if wage growth accelerates.
Economists at Goldman Sachs predict that every percentage-point increase in labor-cost inflation will drag down S&P 500 earnings by 0.8 percent. In total, labor costs amount to 13 percent of revenue for S&P 500 companies.
The industrials sector is most susceptible to increasing wages, Goldman reports. Those companies have a 21 percent ratio of labor costs to revenue, the most out of the S&P’s 11 sectors. The consumer discretionary sector, the S&P’s best-performing sector this year, is also likely to take a hit if wage growth accelerates.
Friday, July 6, 2018
June's Jobs Report
June was another big month from an employment standpoint, with the economy adding 213,000 new jobs, the Bureau of Labor Statistics said this morning. Job gains have averaged 215,000 per month over the first half of 2018. Nevertheless, the unemployment rate ticked up to 4.0 percent.
U.S. employers have added to payrolls for 93 straight months, extending the longest continuous jobs expansion on record. The BLS report showed professional and business services adding 50,000 jobs in June. Employment also grew in manufacturing, health care and construction. All levels of government added 11,000 jobs last month.
The unemployment rate rose in June from its lowest mark since April 2000 because 601,000 Americans entered the labor force, and not all found jobs. It’s a sign that historically low unemployment may have prompted some of those on the sidelines to start job searches.
U.S. employers have added to payrolls for 93 straight months, extending the longest continuous jobs expansion on record. The BLS report showed professional and business services adding 50,000 jobs in June. Employment also grew in manufacturing, health care and construction. All levels of government added 11,000 jobs last month.
The unemployment rate rose in June from its lowest mark since April 2000 because 601,000 Americans entered the labor force, and not all found jobs. It’s a sign that historically low unemployment may have prompted some of those on the sidelines to start job searches.
Thursday, July 5, 2018
2018's Biggest Winners So Far
With the first half of 2018 now in the books, these are the top 10 best-performing stocks in the entire S&P 500 index for the first six months of the year:
- Fossil Group, up 215 percent
- ABIOMED, up 114 percent
- Netflix, up 95 percent
- Twitter, up 80 percent
- XL Group, up 62 percent
- Tripadvisor, up 60 percent
- Under Armour, up 59 percent
- Align Technology, up 53 percent
- Chipotle Mexican Grill, up 50 percent
- Macy's, up 44 percent
Wednesday, July 4, 2018
Thoughts for Independence Day
"Humanity has won its battle. Liberty now has a country." ~Marquis de Lafayette
"Liberty has never come from the government. Liberty has always come from the subjects of it. The history of liberty is a history of resistance." ~Woodrow Wilson
"For to be free is not merely to cast off one's chains, but to live in a way that respects and enhances the freedom of others." ~Nelson Mandela
"Liberty has never come from the government. Liberty has always come from the subjects of it. The history of liberty is a history of resistance." ~Woodrow Wilson
"For to be free is not merely to cast off one's chains, but to live in a way that respects and enhances the freedom of others." ~Nelson Mandela
Tuesday, July 3, 2018
The Year So Far
It's been a pretty middling year in the markets: Halfway into 2018, the S&P 500 is up less than 2 percent. Moreover, all of those gains are thanks to a rally in just two sectors: technology and consumer discretionary.
The S&P 500 information technology sector, in fact, accounted for 102 percent of the year-to-date gains as of Friday. Amazon.com, which is in the consumer discretionary sector, has accounted for 34.6 percent of all the gains. Amazon.com has gained more than 45 percent since the start of the year.
Considering market caps, the five largest contributors to the year-to-date gains have been:
The S&P 500 information technology sector, in fact, accounted for 102 percent of the year-to-date gains as of Friday. Amazon.com, which is in the consumer discretionary sector, has accounted for 34.6 percent of all the gains. Amazon.com has gained more than 45 percent since the start of the year.
Considering market caps, the five largest contributors to the year-to-date gains have been:
- Amazon.com, up 0.82 percent
- Microsoft, up 1.42 percent
- Apple, up 1.12 percent
- Netflix, up 1.72 percent
- Facebook, up 1.56 percent
Monday, July 2, 2018
Today's the Day
Is today the best trading day of the year? According to the website Marketwatch, the first trading day of July - that's today - is the one day of the year most likely to have a positive return for the S&P 500, which it has done 83.3 percent of the time.
The first half of July tends to be mildly bullish, and often hosts a brief summer rally. Keep in mind, though, that the summer rally tends to be the weakest of all seasonal rallies. Before you get too excited, note that the average return for the S&P on this date is 0.35 percent.
The S&P isn't the only likely winner on this date. The win rate for the Dow Jones Industrial Average is 77.77 percent, and the win rate for the Nasdaq is 72.22 percent.
The first half of July tends to be mildly bullish, and often hosts a brief summer rally. Keep in mind, though, that the summer rally tends to be the weakest of all seasonal rallies. Before you get too excited, note that the average return for the S&P on this date is 0.35 percent.
The S&P isn't the only likely winner on this date. The win rate for the Dow Jones Industrial Average is 77.77 percent, and the win rate for the Nasdaq is 72.22 percent.
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