Over one-third of the S&P 500 companies are reporting earnings this week. This includes both large tech and large oil companies. This could possibly be the biggest week of the quarter in regards to earnings. Last week earnings were very strong but trade war talks seemed to overpower the news. On Wednesday, President Trump is meeting with the European commissioner, Jean-Claude Juncker, to try and work out a deal.
On Friday we have a very important GDP report coming out. The first quarter was very slow, coming in around 2%. We expect GDP to pick up this quarter to anywhere around 3.5% to 4%. We have seen much better consumer spending and business investments in the economy.
The Trump administration is exploring prescription drug imports to counter price hikes. If we start to get a major increase in drug prices they are looking to counter that by possibly importing prescription drugs from places that have a high level of protocol to make them such as Canada, the U.K., France, and even Japan. Even though this hasn’t been approved, the discussion alone has created a chilling effect in regards to keeping drug prices down. Three major manufacturers last week said they would not raise prices for the remainder of the year. This is market impactful because it gives the consumer more money to spend.
The Fed & Rates
President Trump has started to openly call out the Federal Reserve in terms of raising interest rates. In our modern economy, this is one of the first times we have seen a president do this. In the past there has been an “unwritten rule” to not comment on these items with the Fed, even anonymously. Jerome Powell has interestingly pushed back, making this something to certainly keep an eye on.
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