Registered Investment Adviser Caleb Lawrence
Relief over the preservation of the status quo in Europe following the French election spurred the major averages to significant gains to begin the week. A busy one to be sure as the earnings season hits its stride. First quarter preliminary Gross Domestic Product or GDP comes out Friday with expectations of 1.1% growth, the latest high frequency estimate is just .8%. Federal budget and deficit issues take center stage later in the week as the lack of Federal borrowing authority could lead to a government shutdown later this year.
The April Dallas Fed regional index slipped .1 to a still strong 16.8. New orders gained 2 points, inventories showed a first positive reading since October of last year at 1. Price data was mixed but remains high.
The Chicago Fed National Activity Index slipped .19 in March to a still positive .08 on weakness in employment, personal consumption, and housing. The 3-month moving average fell .13 to just .03 as the economy continues to muddle along.
The French election went more or less as expected though the mainstream political parties were marginalized in favor of a pro-European and internationalist banker, the other anti-European Union and protectionist – will now face off in a second round run off on 7 May. Polls have consistently forecast Macron will beat Le Pen and become France’s next president, but a populist anti Euro Zone upset remains a possibility.