Market Framework and Economic Overview

JOHN E. SILVIA DYNAMIC ECONOMIC STRATEGY

GIC RMES Market Framework and Economic Overview John E. Silvia Dynamic Economic Strategy July 11, 2019

Four Sector Economic Framework • Output/Prices of Goods and Services • Credit/Interest Rates • Trade/Foreign Exchange Rates • Equity Capital/Price-earnings and profits • Change is a Constant

Cycle Signals: Slower But Solid on the Real Side • Jobless Claims • 222 (4wk ma), about the average since Dec., is 300 standard bright line?

• ISM-Manufacturing • 51.7 (June), below 1Q and YA, production, orders, jobs still above breakeven

• Factory Orders • Non-defense capital goods orders up in May, up 2.3% YA

• Building Permits • May 1.294M, above 3M but below YA , Pending Home sales up in May, but below YA

• Confidence (Conf Bd) still solid, 121.5 (June) but lower than year ago

Cycle Signals: Slower on the Financial Side • Equity Market: S&P 500, up 2Q, +18.5% YTD • Dollar Index: Up Slightly Since the Start of the Year • Corporate Profits: Pre-tax slower 3.4% L4Q (as of 1Q),but down 1Q • Leading Index: Slower rate of growth, still + L6M • Quality Spreads: AAA, BBB spreads relatively unchanged since BOY