News for the Week of September 11-15, 2017

News for the Week of September 11 – September 15, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

General Markets / Economic

                                                                                                           

1.     China is preparing to shut down bitcoin exchanges, reflecting unease with the virtual currency and its recent surge in value

2.     China is starting to unwind some measures aimed at bolstering the yuan after the currency’s recent surge began taking a toll on exporters

a.     A higher currency means FOREIGNERS need to pay more of their money for YOUR goods. Because it costs YOU more money, you will buy less of that product, making it worse for the exporters in the original country!

3.     The Department of Transportation said it will keep a hands-off approach toward autonomous-car regulation, even as Tesla technology was faulted in a crash

 

 

Company News

 

1.     Apple unveiled its new iPhone X, which comes with a larger display and facial-recognition technology, and will cost $999

2.     Google plans to end its “first click free” policy that enables users of its search engine to bypass paywalls on news websites

 

 

Interesting News

 

1.     A Pizza “festival” was held in NYC with attendees paying upwards of $75 for pizza. Turns out the pizza they received was cold and small (literally smaller than the size of a palm, I’ve seen pictures), with some folks waiting up to 6 hours to received said “pizza.” Obviously, the attendees are looking to recoup money, the NY State attorney general is already on the case, a rather hilarious story!  My favorite quote:

“It was nothing but Jesus [that] stopped me from flipping over those tables. I drove all the way from Albany with my brother. I will be contacting my credit card company…[blah blah blah, more complaining]… I also pray for them, because God will deal with them accordingly!”

2.     A Michigan teenager shot his mother to death last week, while she slept (because while she’s awake she can fight off a bullet?) because the woman wouldn’t let her son have a puppy! The kid was 19 years old, mentally capable. Jeez luiz, I think the mother should have compromised and let him buy a goldfish.

 

 

Commentary for the Week of September 11 – September 15, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

Hurricane Irma caused severe damage to the Southeast, but it was nowhere near as brutal as forecasters had expected. North Korea continued to fire missiles even as the United Nations ramped up sanctions on the country, but the launch had little apparent impact on US traders.

 

Keith Lerner of SunTrust notes “a lot of investors were caught offsides heading into September.” This is likely due to September being historically a rough month for the stock market, coupled with investors already getting more and more defensive during the month. He continues, “there were a lot of correction calls, because people know that September is seasonally a weak month. You started to see people positioned for a downturn.” According to a survey by Bank of America, Global fund managers are trading out of US stocks, reducing their holdings to the lowest level since 2007. Additionally, they are more overweight emerging market stocks than they have been in seven years, along with a higher than average allocation to cash and more have taken out protection against a market drop.

 

While each of those data points sounds bad, it’s almost difficult to come to any one conclusion. Namely, if you’re worried about a market drop, go more to cash, but don’t go more into non-US stocks. The same line of reasoning is if you are worried about a market drop and go more into cash, how do you have more money to protect yourself from a market fall? As such, by market logic that bearishness is rather positive about US stocks as there are more opportunities for positive surprises.

 

This week, the Federal Reserve will meet. Investors will be watching what Chair Janet Yellen says about the agency’s plans to shrink its balance sheet and any hints about whether the Fed will raise rates in December. Traders are increasingly confident that another rate hike is coming this year, with the market pricing a 47% chance.

 

 

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services

 

This information is not a complete description of the securities, markets, or developments discussed and has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.

 

To opt out of receiving future emails from us, please reply to this email with the word “Unsubscribe” in the subject line. The information contained within this commercial email has been obtained from sources considered reliable, but we do not guarantee the foregoing material is accurate or complete.

 

C17-048405

News for the Week of September 4-8, 2017

News for the Week of September 4 – September 8, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

General Markets / Economic

                                                                                                           

1.     China declared initial coin offerings illegal, sending the prices of the leading digital currencies tumbling

2.     Investors in Asia and Europe moved into haven assets and sold stocks after North Korea’s nuclear test

3.     Gasoline prices at the pump hit a fresh two-year high, but the futures market signaled that the supply crunch will soon ease!

4.     Low inflation readings are giving Fed officials second thoughts about another rate increase this year

 .      The Fed has a dual mandate – they are required to 1) keep inflation in line, typically between 1% and 2% and, 2) keep full employment in line (typically around 4.5-5.5% unemployment – we can discuss why unemployment exists in a ‘full employment’ setting at a later date).

5.     The ECB signaled it is likely to announce plans for phasing out its stimulus next month

 

 

Company News

 

1.     The World Trade Organization (WTO) decided that a subsidy from Washington State to Boeing didn’t violate international trade rules

2.     Equifax said hackers gained access to some of its systems, potentially compromising the personal information of roughly 143m US consumers

3.     Amazon launched a plan to establish a second headquarters in North America, setting of a competition to lure the new hub

4.     Facebook said it found ‘inauthentic accounts’ responsible for $100,000 in ad spending that it believes have ties to Russia, after a review in response to election concerns

 

 

Interesting News

 

·       Turns out that Parrots, the most popular pet after dogs and cats, isn’t always man’s best friend. There are now organizations designed to teach people how neurotic these creatures can be, they bully, they bite, they pluck out their own feathers!

 

 

 

 

 

Commentary for the Week of September 4 – September 8, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

Despite the suffering brought by a trifecta of natural disasters, and the shock of seeing Trump teaming up with Pelosi to extend the debt-ceiling deadline, only nuclear tests by North Korea really shook the markets. And even then, it wasn’t much of a shock.

 

Dubravko Lakos-Bujas, head of US equity strategy at JP Morgan observes that the S&P 500 has dropped about 2% when hurricanes make landfall, as sectors that get slammed – think insurance, hotels, and cruise lines – are offset by ones that benefit, like autos, energy and equipment services. A failure to raise the debt ceiling or pass a budget, though has typically caused the market to drop 3% to 5%. “In essence, the market risk associated with the failure of passing the budget and addressing the debt ceiling has been pushed out for now” Bujas says.

 

Andrew Slimmon at Morgan Stanley notes that earnings expectations aren’t coming down, and forecasts generally drop by about 7% from the start of the year, not this year! At Friday’s close, that puts the index’s valuation at a more reasonable 17x earnings (S&P 500 index). “I don’t think that’s all that expensive, we have a setup for a decent rally in the fourth quarter” says Slimmon.

 

 

 

 

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services

 

This information is not a complete description of the securities, markets, or developments discussed and has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.

 

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.  Keep in mind that individuals cannot invest directly in any index. Individual investor's results will vary. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

 

To opt out of receiving future emails from us, please reply to this email with the word “Unsubscribe” in the subject line. The information contained within this commercial email has been obtained from sources considered reliable, but we do not guarantee the foregoing material is accurate or complete.

 

A17-047189

News for the Week of August 28 - September 1, 2017

News for the Week of August 28 – September 1, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

  

General Markets / Economic

                                                                                                           

1.     Gasoline prices surged to a two year high at the pump, a sign of economic fallout from Harvey spreading throughout the US

2.     US inflation remained subdued in July while household spending rose, underscoring the conundrum faced by the Fed

3.     Packaged food firms are coming under pressure from retailers that are pushing big brands to lower prices

4.     The US economy expanded at its most robust pace in more than two years in the spring

 

 

Company News

 

1.     Well Fargo said its sales practice scandal was far broader than previously acknowledged, as it raised the tally of suspect accounts

2.     Uber’s new CEO said he is aiming for an IPO in 2019

3.     Cadillac sales are rising at the fastest clip since the Reagan administration, with demand driven by China

4.     Microsoft and Amazon plan to allow their voice enabled digital assistants to work together

5.     Apple is allowing Chinese customers to use mobile payment system WeChat Pay for App Store purchases

6.     United Technologies is near a deal to buy Rockwell for more than $20B; a tie up that would create an aircraft equipment giant!

 

 

 

Interesting News

 

·       10 years ago, Tiger, a pudgy orange tabby cat broke into a maximum-security prison in Westchester County. Tiger currently turns his nose up at tuna from the mess hall, but gladly chows down on tinned tuna inmates buy for him at the commissary. This prison is the infamous “Sing Sing”

 

 

 

 

 

Commentary for the Week of August 28 – September 1, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

It took a natural disaster to erase the market loses created by man-made ones. Heading into the last week of the month, the S&P 500 was sitting on a 1.1% loss and things were looking bad. Tensions with nuclear-armed North Korea loomed, along with fears of a government shutdown, nearly helped August live up to its reputation as a terrible month for stocks. Instead, the market rallied and the S&P 500 finished the month up 0.3%.

 

It’s strange to think we have to give Hurricane Harvey much of the credit for the market’s rebound. The storm has wreaked havoc across Texas, destroying cars and homes and upending people’s lives. But traders kept trading, and the market appears to view Harvey as a force that reduces some Washington risks instead of increasing them. Jason Ware of Albion Financial says “Harvey makes it less likely that we have a government shutdown, less likely we breach the debt ceiling, it’s reassured buyers that those concerns are unlikely to topple the market.”

 

So, August didn’t turn out nearly as bad as many feared, but its reputation for creating market wreckage pales in comparison to that of the ninth month. Over the last 50 years, the Dow has dropped 0.85% on average in September, according to Bespoke Investment Group data, with a decline occurring nearly two thirds of the time. and this September is chock full of potential land mines. The Fed is conducting its two-day policy meeting beginning on September 19, and there’s a good chance it will start shrinking its balance sheet. And even if the market is betting on the debt ceiling getting raised, that still needs to be done by the end of the month!

 

But September doesn’t have to be a death sentence. While the month has been historically bad, that doesn’t mean a decline is preordained, and in this case, past might just be prologue. Since 1983, the S&P 500 has dropped 2.6% on average when it was down for the year as September began, according to Bespoke. But when the benchmark entered September in positive territory, it averaged a positive finish, albeit a small one, for the month. And so far, the S&P is up 10.6% on the year!

 

 

 

 

 

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services

 

This information is not a complete description of the securities, markets, or developments discussed and has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.

 

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.  Keep in mind that individuals cannot invest directly in any index. Individual investor's results will vary. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

 

To opt out of receiving future emails from us, please reply to this email with the word “Unsubscribe” in the subject line. The information contained within this commercial email has been obtained from sources considered reliable, but we do not guarantee the foregoing material is accurate or complete.

 

A17-046117