US stocks fell 3.6% in January, gained 6.0% in February, fell 1.9% in March for a net gain of 0.3% on the year. The dollar gained 9% YTD relative to the Euro, on top of last year's 13% rise, but stabilized in recent days. Crude oil bottomed around $46 in February, traded in a range of $45-55/barrel in recent weeks.
Read US and World Market returns here.
The jobs report on April 3rd surprised to the downside - adding only 126K jobs versus expectations of 244K. The US unemployment rate remained at 5.5%, the lowest level in 6 years, but annualized jobs growth of around 2 million/year barely keeps up with growth in the work force from demography and immigration. Labor participation rates are still quite low, which keeps down wages (good news for inflation) but also keeps down consumer spending (bad for business.)
We expected an increase in consumer spending given that the drop in gasoline prices adds $750/year to the average family budget. Consumers remain cautious given wages only grew 2.1% over the last year. Perhaps a sign of change - McDonalds and Walmart recently raised employee salaries by an average of $1/hour and introduced new benefits.
All eyes still on the Federal Reserve, which keeps hinting about higher rates, but has yet to take action. Gains in the dollar were driven by expectations of stronger economic growth and higher interest rates in the United States. Oil supplies are inflated worldwide as producers keep producing despite lowered demand. US corporate earnings are under pressure as the strong dollar hurts overseas sales, while US consumers rotate to cheaper imports.