HIGHLIGHTS

• US equities increase by 3.66% and international stocks rise by 2.13%
• Non-farm payrolls explode higher by 313,000 in a very strong employment report.
• Trump makes the steel and aluminum tariffs official.
• Trump jumps at the opportunity to meet with the North Korean leader to discuss nuclear disarmament.

MARKET RECAP

Markets rallied powered by a very strong employment report. US equities were up by 3.66% for the week and international stocks rallied by 2.23%. The market celebrated its nine-year anniversary, now just three years short of the longest bull market ever, which ran from December of 1987 to March of 2000. Interest rates rose by a couple of basis points.

EMPLOYMENT/ECONOMY

Non-farm payrolls increased by a whopping 313,000 in February. That was 108,000 over consensus and the biggest increase since July of 2016. It was, without question, a remarkably favorable report. The combination of global growth and a pro-business administration (at least prior to the implementation of tariffs, read below), helped by deregulation, has put job growth into a higher gear. The prior two months were increased by 54,000 jobs. The year over year increase in average hourly earnings dropped to 2.6% from a downwardly revised level of 2.8%. The unemployment rate stayed steady at 4.1%, but that was due to a big increase in the labor force (another positive sign). Initial unemployment claims increased by 21,000  to 231,000. That was the biggest increase in six months, but 231k is still a low number.

However, while the labor market continues to shine, GDP estimates for Q1 growth continue to sink, both the GDPNow and the Nowcast are now less than 3%, at 2.5% and 2.83%, respectively.

TARIFFS

The battle over steel and aluminum tariffs raged on this past week. Trump made it official by authorizing a 25% tariff on steel and a 10% tariff on aluminum. There was intense lobbying against the tariffs from countries around the world, as well as businesses that will be impacted inside the US, and most Republican lawmakers. 107 House Republicans signed a letter to Trump asking him to reconsider. The opponents made some headway, as an exemption was made for Canada and Mexico, with an invitation to other countries to explain why they should also be exempt.  We have no issue with tariffs levied on countries that legitimately “dump” steel and aluminum and do not abide by normal rules of trade, but to punish companies and countries that play fair is not right and will be damaging from an economic standpoint to all. How much damage will depend upon if countries around the word retaliate or not. Trade is not a zero-sum game. Free trade sets up a win-win scenario that promotes economic growth around the world, including here in the United States.

NORTH KOREA

North Korean leader Kim Jong Un offered to meet with Trump in a few months, and Trump quickly replied “Yes.” North Korea agreed to talk about eliminating their nuclear weapons. For a US President to agree to talks of such importance literally on the spur of the moment, is highly unusual and probably without precedent. But this is Trump, the self-proclaimed ultimate dealmaker, and if he can pull this off and make Korea a nuclear-free zone, no one can question that this would be a “win” of monumental proportions. No one is assuming this will actually happen, but it is more than worth the try.

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