Trade Deals Calm Markets

Announced trade deals and corporate earnings helped push markets higher last week.

We are about a third of the way through 2nd quarter earnings season, and at least 80% of S&P 500 companies and beating earnings estimates. This is above the 5-year average of 78% earnings beats. In addition, several trade deals were announced last week and over the weekend. Deals between the U.S. and Japan, EU, Indonesia, and the Philippines are touted as lowering tariffs on U.S. goods, while keeping most tariffs on imported goods at roughly 15%. These deals also have been advertised as brining investments into the U.S., which would be good for economic growth.

The standoff between the White House and the Fed continues as there doesn't seem to

be any immediate resolution. Fed futures continue to show a 97% probability of no change in rates at next week's FOMC meeting, with a 67% probability of a rate cut at the next meeting in September. Jobless Claims have dipped for 6 consecutive weeks and are now below trend. Consumer Spending remains solid, with Redbook Sales remaining above trend. Market seasonality suggests softer returns over the next three months. investors should stick to their investment plan and not become too focused on a month or two of lackluster returns.

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