Stocks continued to rebound this week as international stocks (red) remain positive year-to-date while US stocks (pink) have made significant gains from their lows, but remain negative so far this year. US government bonds (blue) and corporate bonds (green) have behaved well this year and are positive.
Global markets were boosted this week on news that China is evaluating the possibility of trade talks with the US.
The Chinese economy is in the early stage of recovery and a trade war with the US is the last thing they need now.
Therefore, it’s no surprise to hear that the Chinese government is quietly exempting its retaliatory tariffs on some US goods in an effort to blunt the negative impact on their economy.
“It shows how, underneath its tough rhetoric, Beijing is trying to mitigate the impact of the U.S. trade war on its export-reliant economy, the world’s second-largest, which was already under pressure from a broader slowdown.” https://www.newsweek.com/china-quietly-exempts-key-us-goods-tariffs-report-2065950
In other good news this week we learned that the US job market remained stronger than expected in April, with 177,000 jobs created versus the Dow Jones estimate of 133,000.
https://www.cnbc.com/2025/05/02/jobs-report-april-2025.html
Finally, we got our first look at US economic growth (GDP) for the 1st quarter this week and it showed a -0.3% contraction. On the surface, this looks concerning. But when we look at the components of GDP the picture becomes much clearer. While it looks like US consumer spending (blue) and business investment (orange) were good, a massive spike in imports (brown) dragged GDP lower as Americans stocked up on foreign goods in anticipation of higher prices due to tariffs. Additionally, US government spending (gold) declined slightly in the 1st quarter, the first time since 2022.
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
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