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What I think I learned last week #31

April 4 marked the 141st anniversary of the world’s first regular telephone line, connecting Charles Williams’ metalworking shop on Court Street in Boston with his home in Somerville, Mass., went into service back in 1877. “I went into his office this afternoon,” marveled Alexander Graham Bell, “and found him talking to his wife by telephone. He seemed as delighted as could be.” This also marked the last time that a husband was delighted to talk to his wife while at the office.

Wall Street’s selloff on Monday (which occurred while Europe was on vacation), marked the worst start to April since the Great Depression. It left the three major US indices in correction territory as the Dow, S&P 500 and Nasdaq were all 10% below their January highs.

Following the Monday selloff, stocks rebounded as the S&P 500 posted its strongest three-day performance since 2016.

Concerns about global economic growth are starting to appear. Consider recent data from Germany and the US:

– German retail sales fell by 0.7% in February, a big miss from the 0.6% gain ex That left sales up by 1.3% per cent on the year, below the expected 2.2%.
– German industrial production dropped in Februaryby the widest margin in two and a half years, recording a 1.6% drop in industrial output in February compared with January. That was a big surprise compared to expectations of an increase of 0.3%.
– German exports in February fellby the most since August 2015.
– The US ISM Manufacturing Index for March of 59.3 missed consensus estimates of 60.0, and trailed February’s 60.8 report. Prices paid jumped to 78.1 from February’s 74.2, showing higher raw material prices for the 25th straight month. New orders and the employment index each fell more than 2 points from last month, while the production index and supplier deliveries were also lower. The backlog of orders hit its highest level in 18 years, as respondents cited labor and skill shortages causing production slowdowns.
– US nonfarm payrolls rose only 103,000, far less than the expected rate of 193,000 for March. Unemployment rate remained at 4.1%.

Despite this data, Federal Reserve Chairman Jerome Powell said the outlook for inflation and employment support further gradual interest-rate increases

According to the U.S. Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week, reaching the highest level since 2015.

Saudi Arabia unexpectedly raised oil prices, increasing the official selling price of May crude. Later, it was reported that Saudi Arabia is secretly targeting an oil price of $80 per barrel. The market quickly responded by taking it up to its highest since December 2014.

Zuckerberg talked to the press. Facebook shares jumped. Zuckerberg talked to Congress. Facebook shares jumped.

Who’s cryin’now? That would be John Cryan, who was replaced as Deutsche Bank CEO by Christian Sewing, who will try to stitch up the sliding stock price.

Just as we thought the trade wars were de-escalating because new National Economic Council Director Larry Kudlow said the tariffs are a negotiating tactic, Trump comes along and threatens an additional $100 billion in tariffs on Chinese goods.

Finally, the French government will take a bit of a gamble as it plans to sell 50% of the national lottery company Francaise des Jeux.

And that’s what I think I learned last week…