The day started off with a poor GDP, but the stock index markets were still able to close the week higher.
The U.S. Economy grew at a 0.7 % pace the first quarter. This is a decline form the 2.1% level we saw to end 2016, and lower than the consensus 1.0% forecast. It was also the slowest pace in three years. Consumer spending grew at 0.3%, the lowest level since 2009 .
Indices sold off, but held many of the gains put in during the week. The market has had a mixed reaction to the new tax plan, but seemed to like to avoidance of a government shutdown. Both the S&P 500 and Dow Jones traded lower on the day, but were able to close near their all time highs.
The market will get jobs date next week and will be looking at the numbers for a sign of what course the Fed may take. Right now the forecast is for two more rate hikes this year. The debate is over if there is a possible additional hike on the table.
The geo-political powder keg is also of concern. North Korea started the weekend off with another missile test. Any further escalation or a military response from the United States would give the market jitters, and probably start some serious selling off. It might not be a bad time to start thinking about downside protection in the form of out of the money puts.
John Weyer
Director Commercial Hedging
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