Vorisek Financial Weekly Market Update for June 6, 2018

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Good morning!

Despite growing trade tensions, US stocks advanced late last week, surprising many investors.  The “temporary exemptions” from the steel and aluminum tariffs that had previously been granted to Canada, Mexico and the 28 nations of the European Union all expired last Friday (6/01/18), setting the stage for retaliatory tariffs on a range of US exports.  Instead of being scared off however, stock investors were boosted by the news of a North Korea/US summit that is back on the calendar for next week and a May 2018 American jobless rate of only 3.8%.  The US has not reported a lower unemployment rate since December 1969 (source: Department of Labor).              

The monthly collection of jobs data in the USA is a combination of science and art.  60,000 American households are asked to complete employment surveys by the 12th of the month.  The employment status of the individuals in those 60,000 households is then extrapolated to project national figures for our country’s actual 120 million households, i.e., just 1 out of every 2,000 households provides the data that determined May’s 3.8% jobless rate (source: Department of Labor).  

On 11/30/16 with the price of oil at $49.44 a barrel, the 14-members of OPEC agreed to slash production by 1.2 million barrels a day, along with additional cuts of 600,000 barrels a day from non-OPEC member countries (including Russia) – a combined reduction of 1.8 million barrels a day.  OPEC and Russian oil officials will discuss boosting the global oil supply by 1 million barrels a day when they meet on 6/22/18.  The price of oil closed at $65.81 a barrel on Friday 6/01/18 (source: BTN Research).      

Notable Numbers for the Week:

  1. JUST THREE - The top company in the Fortune 500, an annual evaluation based upon total revenues for the previous calendar year, has been held by just 3 different companies over the 63 years that the magazine has published the rankings (source: Fortune).

  2. STRONG BANKS - No US banks failed during the first 5 months of 2018 (January-May), the first time that has occurred since 2006.  Since 2007, 531 banks have failed, an average of 48 per year over the last 11 years (source: FDIC).  

  3. THEY REALLY OWE NOTHING - An estimated 45% of the 176.1 million tax returns projected to be filed next year for tax year 2018 will legally pay zero federal income tax (source: Tax Policy Center).

  4. JUST IN TIME FOR SUMMER TRAVEL - The Euro was worth $1.1685 as of 5/31/18, down from $1.2012 as of 12/31/17, i.e., Euro down and US dollar up.  A stronger greenback means Americans will pay less to travel in Europe this summer (source: BTN Research).

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