Financial and Economic Brief - May 29, 2018by © Liberty Publishing, Inc.
Consumer Confidence Strong
The Conference Board’s measure of consumer confidence matched analysts expectations in May. The May reading matched Reuters’ estimates at 128, an increase from 125.6 in April. “Consumers’ assessment of current conditions increased to a 17-year high, suggesting that the level of economic growth in Q2 is likely to have improved from Q1,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Overall, confidence levels remain at historically strong levels and should continue to support solid consumer spending in the near-term,” Franco said.
S&P 500 Down over Italy’s Crisis
The S&P 500 and DJIA hit near three-week lows today as investors switched cash into “perceived safe havens” of global financial markets due to a deepening political crisis in Italy. European markets saw a second day of selling due to fear that repeat elections may become a de facto referendum on Italian membership of the currency bloc. “The kick-off to a shortened trading week is looking ugly as Italy’s political woes weigh heavily on the global markets,” noted Peter Cardillo, chief market economist at Spartan Capital Securities. “A crisis of confidence for the euro seems almost inevitable, which is fortifying the greenback and sending bond yields lower as the safety trade overrules.”
US Dollar Index is Rising
The US Dollar Index, which measures the value of the dollar against major global currencies, has been rising. It’s risen more than 3.5% in the past two weeks and is now up for the year. A weaker dollar boosts the profits of multinational companies because it makes their products less expensive overseas. Companies also get to report higher revenue from abroad. So the dollar’s rally is turning into a problem. “Because about two-thirds of our company is outside the United States, a weak dollar is a positive for our gross margins,” said Apple chief financial officer Luca Maestri. “A strong dollar, as it’s been during the last four years, has been a bit of a headwind.”