Intel and 3M are among the losers in this record setting market

Due to the risk of anticipating US exceptional, US markets with great advantage have distanced themselves from the rest of the world. Use listed funds to illustrate,
SPDR S & P 500 ETF

(ticker: SPY) posted a total return (including dividend) of 16.73% for the year to Thursday, according to fundracker Morningstar's data. Invesco QQQ Trust (QQQ), which tracks the largest shares in tech-heavy Nasdaq, returned 23.7%. Venturing abroad paid less well. The
iShares MSCI EAFE ETF

(EFA), which traces the major non-US developed markets, returned 1[ads1]2.59% while
iShares MSCI Emerging Markets ETF

(EEM) returned 11.9%.

The robust recoveries from the fourth quarter slide came after the Federal Reserve said it would be patient to raise interest rates, a statement that would put a blanket of peace on stock, bond and foreign exchange markets. Dampened volatility has worked to reduce costs by insuring high-quality corporate credits against defaults, points out Peter Cecchini, Cantor Fitzgerald's global chief market strategist. And the more profitable business conditions have in turn worked for the benefit of the stock market.

Take
Netflix

(NFLX) as a prominent example. Video streamer sold $ 2.2 billion of its junk-rated debt (Ba3 at Moody's Investors Service, BB-minus of S&P) this week at dividends of 5.755% for US dollar debt and 3.875% for debt in euro, in what a pro described as a yield-hungry market. The billions went to finance the streaming service's ambitious production plans, as Barrons Alexandra Scaggs wrote. Even Saturday Night Live made fun of all the money Netflix throws on questionable projects. Either way, the inventory is up to 40% so far, since Netflix subscriber rolls are growing fast enough to convince bulls that the cost is worth it.

The average of non-entering averages was the Dow Jones Industrial Average, which actually slipped 0.06% a week. Credit, or more properly, goes to some of its 30 components, for example
Intel

(INTC), who died 9% on Friday on disappointing guidance. An earnings error sent
3M

(MMM) down 13% on Thursday, the biggest loss since the 26% Black Monday drunk on October 19, 1987.

Louise Yamada, Doctor of Technical Market Research, who heads an advisory service bearing her name admits this year's rally has not yet triggered her monthly momentum indicators. It leaves her on some of a junction. Other technical indicators, such as the predominance of stocks over decliners and roster names that make new heights, are also convincing at this time. The major averages such as the S & P 500 and Nasdaq create new heights, but other former FAANG leaders, for example
Amazon.com

(AMZN) and
Facebook

(FB) is still shy of its old peaks.

Instead, Yamada points to leadership from technological stars of the last boom, for example
Microsoft

(MSFT), which affected $ 1 trillion in market value this week, and
Cisco Systems

(CSCO). Industrial names included
Expeditors International of Washington

(Exp)
Paccar

(Computers connected),
Illinois Tool Works

(ITW)
Ingersoll-Rand

(IR), and
Ametek

(AME) is also among other leaders who are not mentioned much.

But on average there are wide spreads. Howard Silverblatt by S & P claims that since the last peak in the S & P 500 in September in September (where the market is unchanged, after the fourth quarter swoon and recovery in 2019), half of the component stocks are up and half down. It makes it a stockpicker market, he says. Indexers are convinced that it's okay if you pick up the winners and avoid the losers.

The calendar also gives less guidance, since "Hoi" sells in May and goes away "rule has lost its reliability. Our Dow Jones Market Data colleagues find that the Dow averaged 7.55% during November 1 until April 30, over the last 50 years, while it was only 0.31% between May 1 and October 31. But recently, the difference has been significantly reduced, and on May 1 to October 31, Dow has an average value of 4 , 31% over the past five years, demanded an average gain of 5.48% for the period April 1 to April 30, but rather less convincing, past performance has rarely been less hedging of future returns.

Lies, cursed lies and GDP statistics. It pretty much describes the report map for the first quarter which showed that the US economy grew at a much faster rate than expected 3.2% annual interest rates after inflation.

But even a glance at the gross domestic product headline showed a long t less robust growth. Nevertheless, the predictions of the economy that occurred in a recession appeared as reports of Mark Twain's deaths, too early.

And despite the fact that the data show that inflation is well below the Fed's 2% target, 3% registers real growth and a stock exchange position this. Prior to the week, interest rate cuts from the central bank appear unlikely.

The quarterly GDP for the first quarter represented a marked acceleration from the 2.2% pace in the fourth quarter of 2018, and as in performance reports, a blow to the consensus forecast of 2.3%. But after removing transition factors, the economy increased significantly in the first three months of the year.

Net exports made a full percentage point in the growth rate in the first quarter, writes Paul Ashworth, economics in the US economy at Capital Economics, in a research note. Exports expanded to 3.7% annual interest rates while imports contracted, also at 3.7% pace, both pluses for GDP. Exports and imports usually go in the same direction, along with the general economy. In any case, this improvement in commerce "will not continue towards a backdrop of very weak global trade," he adds.

GDP was also flattered by a strong jump in inventories, which increased 0.7 percentage points to 3.2% figure. Government spending also increased with an annual interest rate of 2.4%, reflecting a highway jump and road expenses, and reversing a 0.4% contraction in the fourth quarter.

Stripping out the government, trading and stock fluctuations, the real private domestic final sales core of the economy – grew at only 1.3% annual interest rate, half the pace in the fourth quarter. This was the weakest rate since the second quarter of 2013,
Morgan Stanley

economists write in a research paper.

The increase from inventories in March quarter points to downside risks for the current quarter, the bank's economists point out further. In fact, this was the third consecutive quarter where the warehouse increased GDP. Now comes the payback time. Morgan Stanley is looking for a major GDP reversal in the second quarter, with economists predicting shifts at just 1.1% pace.

Expenditure on personal use, which accounts for more than two-thirds of the US economy, has declined sharply in the second quarter to just 1.2% annual interest rates from 2.5% in Q4 2018 and 3.5% in third quarter. "Consumption was probably held back in the first quarter by a number of headwinds, including the government's shutdown, poor weather and volatility at the end of last year, and we would therefore expect a healthier pace to spend next quarter," the bank's economists write.

Housing investment continued to contract at an annual rate of 2.8% in the first quarter, which was less severe than the fourth quarter's 4.7% annual decline. (Though you wouldn't know it from the 24% annual increase in
iShares U.S. Home Construction ETF

[ITB].)

However, business investments increased by 2.7% in the quarter, mainly due to an 8.6% increase in intellectual property, according to a RDQ Economics client note. How this figure is calculated is something of a mystery, writes David Rosenberg, chief economist and strategist at Gluskin Sheff, although the strength of the software was evident in Microsoft's blocking results.

The GDP report presents a dilemma for the Fed. The core of personal consumption expenditure deflator (which excludes food and energy prices and is the central bank's favorite inflation measure) rose by just 1.27% in the first quarter and 1.68% the year before, Morgan Stanley estimates. Some economists argue that subterranean inflation requires a cut in interest rates to keep real interest rates up.

But after a good GDP figure for GDP, asking for unemployment to fall further, to 3.6% in the April report due to next Friday, from 3.8% in March, Greg Valliere, US chief executive, wondered. AGF Investments. "A price swing is obviously out of the question, despite claims by President Trump and his financial adviser Larry Kudlow," he writes in a client note. In fact, interest rate rises can return to the table if inflation rises.

Despite the headline financial figures, the futures fund for federal funds remained at a quarter point or more in the Fed's 2.25% -2.5% target area. According to the CME FedWatch page, futures traders had a 63.8% chance of a cut that was priced at the December policy meeting and a 68.6% probability at the January 2020 meeting. Although it was much smaller than meeting the eyes of the GDP headline, it is difficult to see the Fed lowers without any sign of a more serious deterioration.

Write to Randall W. Forsyth at randall.forsyth@barrons.com