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Perspectives from Above the Noise -- Week of April 23rd, 2018

| April 23, 2018
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he S&P 500 pared a weekly gain as a late-week selloff overshadowed what has so far been a solid earnings season. All three major U.S. equity indices fell at least 0.8% on Friday as inflation concerns mounted after the key 10-year breakeven inflation rate, derived from 10-year TIPS, climbed to a three-year high of 2.19%. Computer chipmakers led the Technology sector broadly lower after analysts downgraded the leading U.S. smartphone maker amid demand concerns in China.

For the week, the S&P 500 gained +0.54%, the Dow Industrials rose +0.42% and the MSCI EAFE (developed international) +0.50%.

What We’re Reading

Even Odds for Four Rate Hikes -- CNBC

North Korea Ceases Missile Testing -- Reuters

Chart of the Week: Housing Starts Jump in March

Home construction got off to a strong start in the first quarter. Housing starts jumped to 1.32 million annualized in March, driving the 3-month average to its highest level since 2007. Moreover, the 12-month average is at its highest level since April 2008. The trend in housing starts remains positive, but the pace in home construction growth is being held back by a few notable headwinds, including a shortage of construction workers, rising material and land costs, and high housing prices relative to wages in several regions.

Nonetheless, housing demand remains strong as home prices continue to move higher and the average months’ supply of housing inventory trends lower. There was a lot of strength within multi-family housing starts in March (14.4% increase), while single-family starts disappointed (down 3.7%). Multi-family construction has done well throughout the recovery, but single-family construction remains low compared to prior economic expansions. We anticipate that housing starts will continue to trend higher this year, albeit at a more gradual pace because of the many headwinds that the housing industry currently faces.

Some materials are chosen by the Cetera Investment Management team and summarized by Jason Vitucci who is not affiliated or registered with Cetera. Cetera Investment Management provides investment management and advisory services to a number of programs sponsored by First Allied Securities and First Allied Advisory Services. Cetera Investment Management individuals who provide investment management services are not associated persons with any broker-dealer. International investing involves additional risk, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification.

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