Monday, June 5th, 2017
Two relatively minor economic reads hit the tape ahead of the opening trading session for this week. The final revision on Q1 Productivity improved from -0.6% in the last review to unchanged today. We also saw Unit Labor Costs reach 2.2%, which is slightly below the 2.4% expected from a consensus of analysts. Both of these reads spell a tepidness in the U.S. labor market, following a weaker-than-expected BLS non-farm payroll headline number last Friday of just 138K new jobs.
Nevertheless, the three major market indexes reached record highs again at the end of last week, clearly not shaken by these tepid numbers. Still expecting passage of business deregulation and corporate tax reform remain baked into the forward-looking cake, both of which provide an immediately boost to GDP growth. We also have recently finished up a robust Q1 earnings season, although Zacks Director of Research Sheraz Mian points out that we may have just seen the zenith and are about to head downwards from here: Earnings Growth Likely Peaked in Q1
Over the weekend, another tragic terror attack occurred, this time in London, where 7 were killed, dozens wounded including 21 critically, from a vicious onslaught from a van crashing into foot traffic and knife-wielding attackers near London Bridge. Again claimed by ISIS, it is the third attack in less than 3 months in the U.K., ahead of Thursday’s general election in the country.
The Conservative party, helmed by Prime Minister Theresa May, looks to hold onto control as it tries to execute its Brexit strategy. Major upsets on Thursday — including May’s job itself — would result in some questions raised about how, when and whether Brexit would actually take place after all.
Here at home, also on Thursday, ex-FBI Chief James Comey will testify before the Senate Intelligence Committee — both in public first and then in private — about the ongoing investigation into Russia’s involvement in the U.S. election last November. Comey had been fired last month by President Trump, so there is much anticipation regarding what Comey will divulge in the hearing.
Ex-FBI Commissioner Robert Mueller currently acts as Special Counsel investigating the Russia/U.S. ties, as well. The potential ramifications here are tremendous; we haven’t focused on the investigation over the past couple weeks, but the pot looks ready to boil again.
Mark Vickery
Senior Editor
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