Going into last week there were a lot of reports that the U.S. was coming back on its demands for protecting property rights and protecting cyber security. It looked like we were getting closer to utilizing our strong points. However, over the weekend, the administration came out and said they wanted to increase tariffs from 10% to 25% by the end of the week because things weren’t going well. The U.S. markets have reacted to this noise. That’s just one component because the Shanghai Composite is down around 5.6%. It seems quite clear that China needs the deal more than we do. We saw this with the Mexico and Canada deal and the same with tax cuts. It seems to be rhythmic in the way that a strong negative point will come out before deals are made. The markets will most likely act in the short term but from what we have seen in the last few years, things tend to unfold for the better during the long term.
Despite the fears of international growth, we are slightly overlooking great domestic economic reports. In the month of April 263,000 jobs were added. In addition to the jobs surge, the unemployment rate has fallen to 3.6%. This is the lowest it’s been since 1969. While navigating through the noise of this international atmosphere, it’s important to keep an eye on powerful domestic data.
In addition to the great job numbers we have noticed that the productivity of workers is the best annualized year-over-year number that we have seen in 10 years. The last time productivity had hit a number even close to this was immediately following the financial crisis where there was an expected pickup. This helps the economy in the way that it highlights the consumer.
The construction numbers for April were superb. These numbers are important because they are non-residential revolved around projects with large engineering fees. What this pretty much means is that these are big infrastructure projects. This is an area in which we have struggled lately, so it would be nice to see this pick back up.
Last week the administration and congressional leaders met in a preliminary approved $2 trillion infrastructure plan. We use this information, as investment advisors, for investment strategies. We don’t want to follow the money but rather be where it’s going. This is why it’s so important for us to look out for trends and indicators in order to get in front of these types of things.
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
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