What an awesome week! REITs and Energy fell off a cliff on Wed and Thur, allowing us to pile into tons of already undervalued, high-yield, quality dividend growth names! Friday was a big recovery, but of course I’m always in favor of market panics so we can continue growing our yield on cost and boosting long-term total returns.
Meanwhile the economic news for very solid. Not just do corporate earnings continue to grow nicely (75% of companies are beating expecations and S&P 500 earnings are growing at 9.8% YoY), but Friday’s jobs report was excellent. With 211,000 jobs created, unemployment falling to 4.4% (lowest level since May of 2007), and wages still growing at 2.5% (room for improvement), the labor market continues to offer the promise of rising wages pushing up consumer spending, and driving improved economic growth; even if tax reform doesn’t pass until next year.
In addition, US rail transport volumes increased 8.5%, tax revenue continues to surge, and the ISM non-manufacturing index rose 2.3 in march.
Meanwhile while the ISM manufacturing index was weaker than expected, it still points to much stronger economic growth, 3.6% for the quarter, and 4.1% for the year.
In other words, it appears that Q1 GDP report may have been a fluke after all, though we’ll need to wait for the next report to find out for sure.