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Week In Review


In response to perceived Chinese backtracking on commitments made during the trade negotiations, the Trump administration increased tariffs from 10% to 25% on $200 billion worth of imports from China and started the process to impose similar tariffs on the remaining $325 billion worth of imports.  High-level talks are continuing between the U.S. and China, but indications are that progress in the negotiations has halted.  The administration also indicated that it would broaden the list of nations reviewed for currency manipulation.  Global markets sold off on the renewed concern about an escalation of the conflict between the world’s two largest economies.

Our Take

Markets had priced in an imminent resolution to the U.S. – China trade conflict, and this week’s moves reflect a reassessment of that outlook.  Over the longer run, an expanding and escalating trade conflict would further reduce global growth at a time when it seemed to be stabilizing.


Both producer prices and consumer prices rose less than expected in April.  Producer prices rose 0.2%, while consumer prices increased 0.3%.  Year-over-year, producer prices are up 2.2% and consumer prices have risen 2.1%.

Our Take

Inflation again surprised on the downside.  The Fed believes that many of the factors holding back inflation are “transient,” and remains reluctant to change its forecasts.  This week’s inflation reports are unlikely to change the Fed’s view, yet inflation data favoring lower rates continues to pile up.


The Illinois House Revenue and Finance Committee approved an amendment to House Bill 391 that would increase the motor fuel tax from 19 cents to 44 cents per gallon.  Diesel and biodiesel taxes would also increase.  Illinois is also considering an increase to vehicle registration fees including a $1000 fee for electric vehicles and doubling the driver’s license fee.  Through all of the proposed taxes and fee increases, it is estimated that Illinois could collect $2.4 billion.

Our Take

Illinois has not increased the gas tax since 1990.  However, the proposed fuel tax increase would cause Illinois to have the highest gas tax in the nation.  The fuel tax increase alone would generate $1.2 billion in revenue to be used for infrastructure improvements.  Illinois law states that revenue collected through fuel taxes must be used only for transportation projects.  The current proposal has some bipartisan support from lawmakers but the sharp increases may not be popular with Illinois constituents.

All expressions of opinions are subject to change without notice in reaction to shifting market conditions.  All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.  Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.