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Kristal Weekly Feed | 1st July 2019

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Got only 15 seconds? Here’s a succinct summary of major global events that transpired last week.

Positives

    • Wall Street had one of the best first halves in years
    • Big U.S. banks increase dividends and share buybacks after passing Fed’s stress test

Negatives

    • Consumer spending increased moderately according to May numbers
    • China service sector slows down in June

Now, for more detail.

 

Positives 

1. Wall Street had one of the best first halves in years

What You Should Know

Wall street had one of the best first halves of the year as Dow Jones rallied 7.2% in June, notching its best June performance since 1938, when it surged 24.3%. S&P 500 rose 17.3% in the first half of the year and reaching an all-time high. All 11 of the S&P 500 sectors rose in the first half of the year, with tech rising more than 26% to lead the way.

What You Should Lookout For 

Investors should look out for how the United States’ trade war with China is ongoing. Trump and China President Xi Jinping are set to meet on the sidelines of the G20 summit, that has kicked off in Japan. Investors hope the meeting will bring about the next phase of negotiations.

Suggested Reading:

For stocks, June was a month of records

 

2. Big U.S. banks increase dividends and share buybacks after passing Fed’s stress test

What You Should Know

Big U.S. banks are increasing dividends and doing share repurchases after passing the Federal Reserve’s annual stress tests. Goldman Sachs boosted its quarterly dividend by 50% to $1.25 a share, from $0.85 a share, and authorised a $7 billion stock repurchase program, up from $5 billion a year ago, with shares rising 2.2%. J.P. Morgan also lifted its dividend by 13% to $0.90 a share from $0.80 a share. The bank also can repurchase up to $29.4 billion in stock under a new program, compared to $20.7 billion last year. J.P. Morgan shares rose 1.9%

What You Should Lookout For 

All 18 of the big institutions tested by the Fed won approval to increase payouts apart from the U.S. division of Credit Suisse, which had weaknesses in its capital planning process, according to the Fed. The new capital plans cover the period from July 1 of this year to June 30 of 2020.

Suggested Reading:

JP Morgan, Goldman and others boost dividends and buybacks after passing Fed stress test

 

Negatives

1. Consumer spending increased moderately according to May numbers

What You Should Know

U.S. consumer spending increased moderately in May and prices rose slightly, pointing to slowing economic growth and inflation pressures, that could give the Federal Reserve a way to cut interest rates next month. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4%. In the 12 months through May, the PCE price index increased 1.5%, slowing from April’s 1.6% increase.

What You Should Lookout For 

Consumer spending increased at a 0.9% annualised rate in the first quarter, the slowest in a year. The Fed signalled rate cuts as early as July, citing low inflation, as well as growing risks to the economy from trade tensions between the United States and China and it also downgraded its inflation projections to 1.5% from 1.8% in 2019.

Suggested Reading:

US consumer spending rises in May, but inflation remains muted

 

2. China service sector slows down in June

What You Should Know

The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 54.2 from 54.3 in May, but stayed above 50 that separates growth from contraction. The official June composite PMI, which covers both manufacturing and services activity, slipped to 53.0 from May’s 53.3

What You Should Lookout For

Services account for more than half of China’s economy, and rising wages have increased Chinese consumers’ spending power, however, the sector softened late last year along with a slowdown in the economy.

Suggested Reading:

China’s service sector activity grows at slower pace in June – PMI

 

Disclaimer

The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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