Weekly Investment & Economic Talking Points

• I may be dating myself a little here, but all I could think about last week when President Trump floated his tariff plan was the movie “Ferris Buellers Day Off”. There was a scene in that movie where a rather bland economics teacher played by Ben Stein was lecturing a very uninterested class of teens about the disastrous Smoot-Hawley Tariff act which was passed during the Great Depression.
• Almost as if it was on cue, major news networks ran with the Smoot-Hawley comparisons over the weekend. Let’s ignore the laughable comparisons for the time being and focus in on what’s real. As I wrote on Friday, and was also confirmed on the front page of this morning’s Wall Street Journal, President Trump is likely using the threats of tariffs as leverage to renegotiate trade deals.
• Personal income increased 0.4% in January and is now up 3.8% over the past twelve months. According to First Trust, government transfers also jumped in January as the 2% cost-of-living adjustment took effect for Social Security beneficiaries.
• The ISM Manufacturing Index rose to 60.8 in February, beating the 58.7 expected number. As a reminder, levels above 50 signal expansion, and levels below 50 signal contraction. Embedded in this report was the prices paid index which came in at a 74.2, the highest it’s been since mid-2011.