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Home / Business / Before the clock: The economy is flourishing, the labor market is strong, earnings are turning to expectations. What's next?

Before the clock: The economy is flourishing, the labor market is strong, earnings are turning to expectations. What's next?



Although concerns about an impending downturn have declined, it may still be difficult for the economy to keep up with its recent success. But that doesn't mean it's impossible.

S & P 500 ( DVS ) and Nasdaq Composite ( COMP COMP ]) has a number of records over the past few weeks. And market researchers believe we will see more. Dow ( DJIEW ) can also set a new full time high as the year goes on.

Economic growth is not expected to fall in a cliff this quarter. Wall Street is largely convinced that the economy has more to give. The consensus estimate is 1

.7% growth between April and July, according to the Atlanta Fed.

In the first three months of the year, the economy increased due to growing inventories and exports – more volatile factors than, for example, consumer spending. If these factors fall in the second quarter, it could be a drag on the economy.

"Second quarter GDP has the potential to be a disappointment. Inventories will be a drag on GDP over the next two quarters," said Omar Aguilar, CIO for shares and multi-asset strategies at Charles Schwab Investment Management. 19659007] Having said that, consumer sentiment can be rescued, outweighing some negative effects of inventories, while US consumers were not used so much in the first quarter, but spending could pick up this quarter.

The Federal Reserve does not, for its part, look like it to see red flags Fed spokesman Jerome Powell has remained committed to his "patient" approach to political change, despite weak inflation and calls from President Donald Trump to cut prices hoping to boost economic growth. 19659006] "The Fed's pivot was probably the biggest catalyst for the stock race at the beginning of the year. Now, financial data will be the catalyst for keeping it going, says Kate Warne, investment strategist at Edward Jones.

The background for supportive economic fundamentals contributes to a better investment climate than last time Warehouses hit record high in the autumn of 2018. This should be reason enough for many investors to wait for the sidelines to get involved and put their money at work.

"At the end of the year it will have been one of two things: whether the market was wrong or the Fed was wrong. If we see the lack of inflation continuing with less economic growth, the Fed will have to cut prices. Stuck, the market must adjust its expectation tations, "Aguilar said.

For salaries for the rest of the year, analysts will keep an eye on the margins. As wages have increased, companies have not passed these costs down to their consumers. So far, they have been able to cut costs elsewhere to balance things out. When it's no longer possible, margins will compress.

2. ECB and Growth: The European Central Bank will give its monetary policy update on Thursday, and all eyes will be on its assessment of the euro area economy. In its latest update, the central bank said that growth in the euro area's growth was rooted in disadvantages. Since then, the first quarter of the currency block came in better than expected by 1.2% from the previous year.

Compared to the United States, Europe's economy is much more dependent on exports. So the acquisition of activity in China, which also showed better than expected growth in the first quarter, should be good for it. Let's see what the ECB president Mario Draghi must say about it.

3. Global synchronized acceleration: The long and short is that economic data is improving across the board. The fear of a global synchronized slowdown was met with stimulus throughout. China is still strongly committed to supporting its economy. The ECB re-engaged in its long-term refinancing operation, which would first support local financial institutions under the European debt crisis. And Wall Street investors praised the Fed for taking the gas off when it chose to keep prices stable this year.

"I believe that global synchronized stimulation will lead to global synchronized acceleration," said Steven Chiavarone, portfolio manager and equity strategist at federal investors.

4. Coming next week:

Monday – Sohn Investment Conference; Occidental Petroleum ( OXY ) merit
Tuesday – US JOLTS; Anheuser-Busch InBev ( BUD ) earnings; Papa Johns ( PZZA ) Income
Wednesday – SALT Conference; GE GE ) Annual Meeting
Thursday – SALT Conference, China Consumer Price Growth, US Unemployment Claims and March March Data, ECB Monetary Update; Ford ( F ) annual meeting
Friday – US consumer price inflation, British GDP; Marriott ( MAR ) income

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