US Leads the Global Economies, EU Struggling

US Leads the Global Economies, EU Struggling

US Leads the Global Economies, EU Struggling

$DIA, $SPY, $QQQ, $RUTX, $VXX

  • NAS Comp Hits New Closing High on Strong US Economic Data
  • The US economy is driving ahead of the rest of the world, now.

May retail sales that topped forecasts Thursday, as the US racks up growth of at least 4% in the current Quarter after a so-so expansion at the start of the year.

In contrast, the EU central bankers trimmed their outlook for Y 2018, while China showed signs of slowing, and emerging markets from Brazil to Indonesia have been sloftening.

That contrasts with last year’s picture of synchronous growth across the world, which has given way to uneven paths for major economies amid trade tensions and rising global Crude Oil prices.

The Fed raised interest rates on Wednesday for the 2nd time this year, with Chairman Jerome Powell saying the economy is in “great shape.”

Then, Thursday, the People’s Bank of China (PBoC) kept the cost of reverse-repurchase agreements steady, defying predictions it would track the Fed’s hike.

Then, the European Central Bank (ECB) decided to taper bond purchases and pledged to keep interest rates unchanged at current record lows at least through the Summer of Y 2019. ECB President Mario Draghi pointed out that the recent economic “soft patch” may last longer even as he said the economy is in a better situation.

In the US

The world’s largest economy, lower taxes enacted by The Trump Administration, a strong labor market and elevated confidence are helping cushion the pinch to shoppers from higher fuel expenses. That is bolstering prospects for household consumption, which accounts for about 70% of the economy.

President Donald Trump is officially targeting sustained 3% growth but has often talked about an even faster pace.

Meanwhile, the ECB’s updated forecasts for the Euroarea showed economic growth should slow to 2.1% this year, compared with its previous estimate of 2.4%.

In China, the world’s 2nd-largest economy, May data for industrial output, retail sales and investment all came in below analyst projections but still strong.

HeffX-LTN’s chief economist, Shayne Heffernan, PhD, expects global growth of 3.3% this year based on market exchange rates, with the US making a 0.6 percentage-point contribution, the biggest among developed economies and just behind the 0.8-point contribution he has down for China.

The decoupling by the US follows an acceleration in growth last year across about 120 economies, accounting for 75% of world GDP, which the International Monetary Fund (IMF) described as the broadest synchronized global upsurge since Y 2010.
Thursday, the major US stock market indexes finished at: DJIA -25.89 at 25175.31, NAS Comp +65.34 at 7761.05, S&P 500 +6.86 at 2782.49
Volume: Trade on the NYSE came in at 934-M/shares exchanged.
  • NAS Comp +12.4% YTD
  • Russell 2000 +9.7% YTD
  • S&P 500 +4.1% YTD
  • DJIA +1.9% YTD

HeffX-LTN’s US Major Stock Market Indexes Technical Analysis

Date Symbol Price Technical Analysis Support Resistance
14 June 2018 QQQ 177.53 Bullish (0.33) 153.45  None
14 June 2018 DIA 251.75 Bullish (0.32) 250.41 254.07
14 June 2018 SPY 278.25 Bullish (0.29) 274.31 280.15

Stay tuned…

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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