Market Commentary, 03/23/18

President Trump signed an executive memorandum on Thursday implementing tariffs on $60 billion worth of Chinese goods. This sparked a renewal of the “tariff tantrum” as the Dow closed down 2.93% and the S&P down 2.52% on Thursday, amid fears of a potential trade war. For the week the Dow dropped more than 1,400 points (-5.66%) and the S&P closed down 5.95%.

In addition to the tariff talk, a $1.3 trillion spending bill passed Congress yesterday and was approved by the Senate early this morning. President Trump mentioned a potential veto of the bill because it does not address a comprehensive immigration solution. Ultimately he signed the spending bill that will provide funding through September 30th and avert the looming government shutdown early this afternoon.

The newly appointed Federal Reserve Chairman Jay Powell announced an increase of the Fed Funds rate for the sixth time since December 2015, from 1.5% to 1.75%. According to the Fed’s economic forecast, there was no change in the expectation of three rate increases in 2018. The Fed does expect the economy to grow faster over the next two years than previously estimated, resulting in a projection of three rate increases in 2019, up from two. In fact, Fed Chair Powell touted this economic strength by saying his “personal outlook for the economy has strengthened since December” when speaking to the House Financial Services Committee and that the next few years will be “good years for the economy.” (Source: Market Watch)

Despite the volatility in the stock market, the economy continues to look strong as is evident from Powell’s comments. Ultimately we expect the market to resume its upward momentum; however, we may continue to see choppy markets in the short-term.

Regards,

Jeremiah Patterson, CFP®
Copelin Financial Advisors
514 Brooks Street
Sugar Land, TX 77478
Phone: 281 240-2902
Fax: 281 240-2856
jeremiah@copelinfinancial.com

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