This month, Russia and China continue to make headlines amid changing international markets. While Russia’s Crimean intervention continues to spook investors, Chinese equity markets saw some recovery due to a “mini-stimulus” package announced by Premier Keqiang. However, investors are still cautious since the mini-stimulus echoes former Premier Wen Jiabao’s costly 2008 stimulus package. China’s long-term growth outlook remains pessimistic, further hampered by President Xi Jinping’s recent plan to crack down on government corruption. Bank of America has estimated that the crackdown could cost the Chinese economy $100 billion in losses over the year.
Concerns in Russia and China have had a formidable impact on U.S. markets since the beginning of the year. The U.S. equity market has continued its sideways skid as the S&P 500 returned just over 1 percent during the first quarter 2014. This trajectory could be attributed to stagnant unemployment rates, which have hovered around 6.7 percent since December, according to The Appleton Group. Because of those rates, the U.S. Federal Reserve may decide to delay its reduction of asset purchases. That decision would increase buying pressure in U.S. markets. However, it may also send a negative message to investors that the Fed isn’t confident in the U.S. economy’s ability to grow without more stimulus.
clearTREND offers market analysis and research on any individual stock, mutual fund, or economic sector, including markets in Northeast Wisconsin. This May, we showcase the tourism, team building, and construction sectors of the economy. Also featured are the largest employment sectors for Door & Kewaunee counties, current trend analysis on select companies headquartered in Wisconsin, and international economic trends.
This month’s clearTREND U.S. Economic Health IndexTM shows that 72 percent of U.S. sectors are expanding. “It is amazing how quickly price trends can change due to an announcement of government stimulus,” says Mark Scheffler of The Appleton Group. “Unfortunately for investors, there is no way of predicting when or what the next announcement will be. The best we can do is be prepared to make adjustments.”
Click here to view this month’s economic data in our digital issue.