Strong Markets and Slow GDP
WEEKLY UPDATE - MAY 1, 2017
In This Issue
Stocks continued their advance on generally strong earnings reports this week despite the Gross Domestic Product (GDP) report showing a slow first quarter economy. The S&P 500 rose 1.51%, the Dow gained 1.91%, and the NASDAQ added 2.32%.[1] On Tuesday, the NASDAQ posted record highs as it closed over 6,000 for the first time.[2] Internationally, the MSCI EAFE was up 2.97%.[3]
On Friday, April 28, we learned that first quarter GDP increased a modest 0.7%, lower than the reported consensus expectations of approximately 1%.[4] Oil drilling and housing performed well, but consumer spending fell, largely due to poor auto sales and lower utility bills.[5] Consumer spending, the largest segment of our economy, rose by only 0.3%.[6] 

While this growth is slower than the 2.1% last quarter - and the lowest we've experienced in three years - the picture is likely not as negative as it may seem at first. [7] Not only did mild weather affect consumer spending on heating, but the government has also acknowledged its challenges accurately calculating data for first quarter GDP. [8] 

In addition to these GDP readings, a number of other events and data releases contributed to market performance this week. 

Domestic Developments
  • Corporate Earnings Were Largely Positive

Thus far in the first quarter, 79% of reporting companies published strong profits.[9] In particular, consumer discretionary companies and commodity producers reported robust earnings while phone services and real estate investment trusts had weaker results.[10] 

  • Trump Announced Tax Plan 
President Trump outlined his new tax proposal, including plans to cut corporate taxes to 15%. [13] Individual tax rates would fall to 10%, 25%, and 35% if Congress adopts the President's plan. [14]

International News
  • North American Trade Experienced Tension
On Wednesday, April 26, reports that the U.S. may pull out of NAFTA created concern in financial markets. [15] By Thursday, however, markets calmed after President Trump said he would agree to requests from Canada and Mexico's leaders to renegotiate the decades-long trade deal. [16] As these negotiations continue, two controversies lay in the background:
    1. U.S. dairy farmers' claims that Canadian action concerning milk imports violates the trade agreement.[17] 
       
    2. A new tariff of up to 24% on Canadian softwood lumber that President Trump announced last week.[18] 
Finding the right solution for the negotiations is important to the U.S., Canada, and Mexico. NAFTA affects a significant portion of each country's economy, including industries such as farming, automotive, and energy. Trade with the two countries accounted for approximately $584 billion in U.S. exports in 2016. [19]
  • French Elections Moved Markets
Political newcomer Emmanuel Macron emerged as the frontrunner in the French election while ultra-right nationalist Marine Le Pen's chances of winning the May 7 final election appear to be fading. [20] After the first round election results eased investor concerns about a possible Le Pen victory, the markets reacted positively with $2.4 billion flowing into European equities by April 26. [21] Asian equities also rallied. [22]

What's Next

With Congress avoiding a shutdown last week, the markets should focus this week on:
  • Earnings reports 
  • Construction spending 
  • April auto sales 
  • Manufacturing data
  • Federal Reserve meeting on Wednesday
By Friday, most remaining S&P 500 companies' earnings reports will be in, including Apple, Facebook, and Pfizer. [23] Looking ahead, we will watch for what economic stories emerge from the data we receive, including the upcoming jobs report. For now, despite the first quarter's initially slow GDP growth of 0.7%, expectations continue for 2.5% growth in 2017. [24]  

ECONOMIC CALENDAR: 
Monday: Construction Spending, Personal Income and Outlays, PMI Manufacturing Index, ISM Manufacturing Index
Wednesday: ADP Employment Report, PMI Service Index, ISM Non-Manufacturing Index
Thursday: International Trade, Productivity and Costs
Friday: Employment Situation



Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5- year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on  Morningstar.com  and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.



" The winds and waves are always on the side of the ablest navigators."

- Edward Gibbon

Horseradish Salmon
  
A healthy, no-fuss fish dish!

Serves 4

Ingredients:
  • 1 English cucumber
  • 2 TBSP distilled white vinegar
  • 2 TBSP fresh dill, chopped
  • 2 TBSP olive oil
  • ½ cup panko (light, crispy bread crumbs)
  • 2 TBSP prepared horseradish
  • 4 salmon fillets, boneless and skinless
  • 6 oz baby spinach
  • salt and pepper
Directions:
  1. Preheat oven to 475°F. 
  2. Cover large baking sheet with foil and set aside.
  3. Grab a large bowl and combine cucumber, vinegar, 1 TBSP dill, 1 TBSP olive oil, and ⅛ tsp each of salt and pepper.
  4. In a small bowl, combine horseradish, panko, and remaining olive oil and dill.
  5. Top salmon with ⅛ tsp each of salt and pepper.
  6. Place salmon on the baking sheet with the smooth side facing up.
  7. Press panko mixture onto each fillet, spreading evenly.
  8. Bake salmon for 8 minutes, or until the fish is opaque throughout and brown on top.
  9. Combine spinach and cucumber mixture in a bowl and toss together to serve with the salmon.

Recipe adapted from Good Housekeeping [25]


Tips to Keep Your Blood Pressure Down

Having high blood pressure is serious. While the proper medication can help you manage your blood pressure, you also can address aspects of your lifestyle to help keep your levels in check. Below are a few changes that can positively affect and help lower your blood pressure.

Tip 1: Lose weight
Losing weight is one of the top life changes that may decrease your blood pressure -even dropping 10 pounds can make a difference. People who are overweight also can develop sleep apnea, which also may increase your blood pressure. Gaining weight around your waistline can increase blood pressure, so closely watching (and minimizing) how you gain fat is important.

Tip 2: Eat less sodium
Generally, people should aim to eat no more than 2300 mg of sodium a day. If you're older than 50, limit yourself to 1500 mg each day. By doing things like eating less processed food and scrutinizing food labels, even small salt reductions can decrease your blood pressure by 2 to 8 mm Hg.

Tip 3: Stop smoking
Every time you smoke, you work against your health. In fact, each cigarette increases your blood pressure - and it remains high for minutes after smoking. By quitting smoking, you will help lower your blood pressure.


Tip courtesy of Mayo Clinic [28]
Grow These Plants to Attract Bees

All over, bee populations are plummeting - which is worrisome, considering they are responsible for pollinating ⅓ of the food we eat. Due to developments such as changes in agriculture practices, many bees no longer have access to the same habitat and food they need to survive. You can help our bee populations by choosing to fill your garden with bee-attracting plants. Here are a handful of flowers that bees love and will make your garden pop.

 

Bee Balm: Native to North America, Bee Balm grows throughout the country - and bees love the flowers. Various species exist, and you can choose from a variety of blooming colors.

 

Lavender: Lavender isn't just an herb that's good for things like teas and cooking, it's also a great bee attractor. The lavender's flowers are quite aromatic, which bloom from spring through summer.

 

Sunflower: Bees love the big flowery heads of sunflowers, which they forage for pollen and nectar. Sunflowers can live all over the country, and you can choose from annual and perennial varieties.

 

Cranesbill: These flowers are a type of geranium that bloom from spring through early winter. The long flowering cycle provides a lengthy timeframe for feeding your bees, while providing long-lasting burst of colors in your garden.

 


Tip courtesy of Natural Living Ideas [29]
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