U.S. Hiring Decelerates in May, Global Central Banks Tilt Accommodative, Oil Enters Bear Market (Again)
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Oil Enters Bear Market (Again): After reaching $66 per barrel in late April, West Texas Intermediate crude oil traded below $52 per barrel at one point last week, thereby entering a bear market (i.e., a decline of more than 20%). This was the third bear market for oil since the start of 2017, showing the ongoing volatility in energy prices. The latest downdraft has been driven by basic supply and demand factors: crude inventories in the U.S. have climbed by nearly 44 million barrels since mid-March, reaching their highest levels since July 2017, while demand has deteriorated as global growth has slowed amidst rising trade tensions.

Global Central Banks Tilt Accommodative: U.S. Federal Reserve Chairman Jerome Powell indicated last week that the Fed is closely watching the recent increase in trade tensions and “will act as appropriate to sustain the (economic) expansion,” which many interpreted to mean the Fed could cut interest rates should on-going trade battles impact economic growth. The Chairman’s comments came as other global central banks have turned to easing measures amid prolonged uncertainties in the global economy. During the past week the European Central Bank extended its pledge to keep interest rates at record lows through the first half of 2020, Australia reduced its key benchmark rate for the first time in three years, and India’s central bank shifted from a neutral to an accommodative monetary policy by cutting its key lending rate.

U.S. Hiring Decelerates in May: The Labor Department reported last Friday that the U.S. added 75,000 jobs in May, down from 224,000 jobs in the prior month. While May’s result marked the 104th straight month of job growth, the slower pace may indicate that employers are taking a more cautious stance toward hiring at a time of slowing global growth and trade tensions. Companies added jobs in health care and business services in May, but hiring grew minimally in production sectors such as mining, construction, and manufacturing. The unemployment rate held steady from the prior month at 3.6%, a 50-year low, while wages were up 3.1% from a year earlier, remaining in line with prior months.

As of May 28, 2019

Week

Quarter-To-Date

Year-To-Date

One-Year

MSCI All Country World

3.63%

0.77%

13.04%

0.06%

S&P 500

4.46%

1.79%

15.68%

5.83%

Russell 2000

3.36%

-1.44%

12.94%

-7.92%

MSCI EAFE

3.23%

1.04%

11.12%

-4.43%

MSCI Emerging Markets

1.03%

-4.33%

5.16%

-10.15%

FTSE NAREIT

2.36%

2.78%

20.44%

17.53%

Bloomberg Commodity

-0.67%

-4.42%

1.63%

-12.34%

Barclays Aggregate

0.36%

2.17%

5.17%

7.37%

WSJ 6/5/19, Marketwatch 6/5/19, Bloomberg 6/5/19, WSJ 6/7/19; Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.