S F M OBSERVER APRIL 2018
The Dow closed the month of March at 24,103 for a decline of -926 points or -3.7%. For the first quarter the Dow dropped -2.5% despite rocketing up 5.8% in the month of January. The combined drop for February and March is a little over -2,000 points. The complacent, steady market of 2017 is gone and has been replaced by a market with significant daily swings. We expect to see more of the same in the coming quarter.
Some important events from the month just passed:
- Lumber prices have risen substantially for a variety of reasons over the past year including a 20% tariff placed on Canadian wood. Builders report the increase is adding $3 - $8,000 to the cost of a new home. Forest fires and rising freight costs are contributing factors.
- Coca-Cola plans to offer a fizzy alcoholic drink in Japan that comes in a can. Coke is attempting to develop new product lines to offset declining sales of typical soft drinks. The new drink is being developed at Coke headquarters in Atlanta and they are quiet on whether they would offer a product like this in the U.S.
- U.S. firms hired 313,000 people in the month of February marking one of the strongest months for jobs in years. Construction and retail jobs led the way. The unemployment rate is currently 4.1% nationally and real wage gains are being realized in many sectors.
- Toys R Us has decided to liquidate the corporation and close down their stores. Although they were hurt by Wal-Mart and Amazon, they also failed to invest in the trend towards digital toys and were left behind. The closing of all of these stores also presents a serious problem for Hasbro and Mattel.
- The Federal Reserve increased interest rates again by ¼% at its last meeting. The prime rate now stands at 4.75% and the average rate on a 30 year fixed rate home mortgage is 4.4%.
Thank you for reading this issue of the SFM OBSERVER. Please feel free to send us any comments you may have.
Until next month,
Glenn Sweeney CFA