Sunday News:
As I am writing this, the futures opened up higher as “Secretary Steven Mnuchin said on Sunday that the theUnited States and China agreed to drop their tariff threats to work on a wider trade agreement.” according to Reuters. ESM18 up 15.75, YMM18 up 176, NQM18 up 47.50 7:00 PM EST Sunday night.
According to Phil Flynn, oil demand is generating the increase in oil prices. Others argue that it is the lack of supply. Maybe a little of both. Either way, the consumer of gas this summer will suffer. We are planning on a long drive for summer vacation this year. As the prices increase, the chances of our driving vacation my decrease. According to GasBuddy.com web site, California has the highest price of $3.69 per gallon, while Mississippi has an average price of $2.59.
What to Watch for this Week
Here is what I am looking at, interest rates. Will the old saying be true? If interest rates go up, the market goes down? With little to talk about on the economic calendar, talk about interest rates will fill the void.
Compared to a year ago. Interest rates have increased. According to MarketWatch.com:
The 2-year interest rate at 2.54% today had doubled from a year ago when it was at 1.274%. I always hear about the 10-year interest rate as well. Now at 3.059% for the first time, since 2011.
So you do not have to watch CNBC or listen to talking heads about interest rates and stock prices, I did a bit of research to help us all understand about the connection between interest rates and stock prices.
When the Fed raises its rate, borrowing money becomes more expensive and depositing money becomes more attractive. This means that more people tend to deposit money for saving and try to borrow less – which affects consumption and spending per general. The lower spending will directly affect the revenue and profits of companies, which in turn will affect their share price. A decrease in interest rates encourages consumers to spend more since depositing is not attractive. Thus, more spending supports companies, and they can increase their revenue and profits. – Robert Parker, CEO at Holborn Assets
When the Federal Reserve Bank reduced interest rates and increased the money supply the market rose.
Now that Rates are rising again, it will be more advantagious to save money and pay off debts. Consumers will reduce purchases of company products, which will lower the stock prices. Ray Dalio, produced a great video that expalins how th emarket really works and it all has to do about interest rates and the transactiosn it creates. this as a cycle. Look back at history to see the cycles.
Global Spotlight
North Korea Resets Summit Expectations. The world got a reminder of North Korean negotiating tactics when Pyongyang threatened to call off the June 12 summit between Kim Jong Un and U.S.
Floating Concessions Between Beijing and Washington. Chinese Vice Premier Liu He’s four-day mission to the United States to try to ease trade frictions with Washington included meetings with former Secretary of State Henry Kissinger and U.S. lawmakers and ended with a White House meeting with President Donald Trump.
Europe Fights Back Against the U.S. The Europeans are not happy that the White House has unilaterally pushed its agenda on trade, Iran and Russia — consequences to Europe be damned.
Trouble for NAFTA. North American Free Trade Agreement negotiators missed a May 17 deadline set by U.S. House Speaker Paul Ryan to submit a new NAFTA agreement to Congress.
stratfor.com
Economic Calendar
Here is a list of the U.S. economic events happenning this week.
briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
