Posted on May 14, 2018

Weekly Market Commentary May 14, 2018

Market Commentary

A benign inflation report and positive news out of North Korea provided a boost for global stock markets. For the week, the S&P 500 soared 2.4%. Global stocks rose, as the MSCI ACWI climbed 2.1%. The Bloomberg BarCap Aggregate Bond Index was unchanged for the third straight week.

Key points for the week

  • Inflation data came in slightly below expectations.
  • Excluding the energy sector, price increases were moderate.
  • Inflation remains a concern as the economy continues to grow.

Economic News


April’s inflation numbers came in slightly below expectations, which provided a boost to markets. April’s price index rose 0.2%, slightly less than the 0.3% expected. Over the last year, inflation rose 2.5%. A rapid increase in gasoline prices in April contributed to the strong number. The continued increase in oil prices will likely boost inflation again in May.

Core inflation, which excludes energy and food prices, rose 0.1% last month and has increased 2.1% over the last year. Energy and food prices often rise and fall more than other sectors.

The stock market reacted positively to the lower-than-expected numbers. Many investors, including those on our investment team at Carson, remain concerned the long economic recovery and low unemployment rate will eventually lead to higher inflation.

While welcoming the news from the last report, we continue to believe inflation will become a greater threat. Our expectations are for wage growth to strengthen and for those costs to be passed on to consumers in the form of higher prices.

Fun story of the week

Teachers pull out all the stops to gain credibility

Teaching has always been a challenge, but gaining credibility in the smart phone era has become even tougher. An Australian teacher found her efforts to recreate McDonald’s Chicken McNuggets at home had the added benefit of raising her “cred” with students. It didn’t hurt the chicken turned out to be quite tasty.