News for the Week of May 30 - June 2, 2017

News for the Week of May 30 – June 2, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

Government / Political / non-Economic

  1. SCOTUS reaffirmed that patent holders can’t keep their rights over a product once they sell it
  2. The Pentagon conducted a successful test of a system designed to shoot down an ICBM, US defense officials said, a demonstration that came amid rising tensions over North Korea’s nuclear-weapons program
  3. Trump urged a change to Senate rules to let all bills pass with a simple majority, in hopes of advancing his tax and health care agenda
  4. The EU’s executive body proposed a steep rise in spending for 2018, the last full year of UK membership
  5. The House intelligence panel issued seven subpoenas, in a sign that its Russia investigation is advancing in scope and intensity
  6. Turkey is expanding efforts abroad to capture Erdogan opponents by canceling passports and nearly netted an NBA player last week
  7. NASA announced that it will launch and unprecedented mission to fly directly into the sun’s atmosphere
  8. Trump said he would withdraw the US from the Paris climate accord in an effort to boost US industry and independence, making a dramatic shift in policy despite lobbying from business leaders and close allies

 

General Markets / Economic

  1. The Fed is set to raise rates at its June meeting, but could defer an expected September move if there are debt-ceiling frictions
  2. Americans ramped up spending in April at the fastest pace in four months, fresh evidence that the US economy is rebounding
  3. Americans refinancing their mortgages are taking cash out in the process at levels not seen since the financial crisis
  4. Economic growth slowed across parts of the US in recent weeks, according to the Fed’s beige book
    • The beige book is a summary and analysis of economic activity. Each district summarizes information and passes it upstream to the Fed, which publishes the aggregate book

 

Company News

  • Daimler said it is boosting use of parts from US based suppliers; a sign of administration pressure on car firms

 

Interesting News

  • Wanna know why YOU didn’t get into Yale? Because you didn’t write an application letter about Papa John’s pizza. Carolina Williams wrote her application essay about Papa John’s, had a hand-written acceptance letter, but of course, she chose Auburn instead. ☹  It was a 200-word essay; which of course I read. Honestly, it was pretty bad; she must have had good grades as well 😉

 

 

 

 

 

Commentary for the Week of May 30 – June 2, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

The bull case for stocks took its biggest hit of the year last week, but nothing seems able to prevent this market from reaching new highs. While the S&P 500 rose 1% on the week, economic data cast shade on what has kept many investors bullish on stocks this year. Despite the death of the so-called Trump trade – the idea that stocks would get a boost from tax cuts, fiscal spending, and deregulation – optimistic investors could always point to a potential pickup in economic growth, even without policy action. Friday’s payrolls report, which showed that a mere 138,000 US jobs had been created in May wasn’t exactly fatal for that view, but it certainly presents a quandary.

 

Still, the Federal Reserve Bank of Atlanta’s closely watched GDPNow forecast model is predicting second-quarter economic growth of 3.4% - none too shabby, unless compared to the 4% it was predicting the day before the payrolls data were released.

 

But what alternatives do investors have? The 10-year Treasury note yields just 2.16% and with payouts that meager, stocks still possess their charms, especially when the US economy continues to growth modestly and the rest of the world looks stronger, says Manning & Napier senior analyst Greg Woodard. “Equities seem to be a reasonable investment, the path of least resistance.”

 

That may be less worrisome than it sounds as Doug Ramsey of Leuthold Group notes that the market’s rally is quite broad, despite concerns that too many of the recent gains have come from industry giants. Even the advance/decline line, a measure of advancing stocks versus declining ones, is sitting at a record high, something that has historically meant that a bull market has at least another three to six months to go. Ramsey says, “I tend to like rallies that are somewhat mysterious, it means that the market is anticipating good news that we’ll read about weeks or months down the road.” It’s just a question of what the good news will be!

 

 

 

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.

 

 

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News for the Week of May 22-26, 2017

News for the Week of May 15 – May 26, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

Government / Political / non-Economic

 

  1. At least 19 people were killed and about 50 others injured by a suspected suicide bomber at a concert hall in Manchester, England
  2. Trump and Netanyahu said Iranian aggression has united Israelis and Arabs and brought Middle East peace closer than ever
  3. Flynn said he would not cooperate with Senate demand for documents, citing his constitutional rights against self-incrimination
  4. SCOTUS found that North Carolina’s congressional map was drawn by GOP lawmakers to disadvantage black voters
  5. Texas’ governor is set to sign into law a bill to penalize school administrators who fail to report teachers’ sexual misconduct – this sounds like it’s 30 years too late.
  6. Saudi Arabia and the US unveiling over $400B in deals and potential investments during the president’s visit to Riyadh
  7. Trump faced resistance in Congress over a budget plan that relies heavily on cuts to social programs and aggressive growth projections
  8. The NRA is framing legislation that would make it easier to buy gun silencers as a public health issue
  9. The House GOP health-overhaul bill would leave 23 million more people uninsured while reducing the federal deficit by $119B in the next decade compared with current law, according to a CBO estimate
  10. The Republican candidate won a Montana special election for the House as he faces allegations that he assaulted a reporter 

 

 

General Markets / Economic

 

  1. The Fed is unlikely to return to its pre-crisis role on the sidelines of financial markets after its expansive stimulus, analysts say
  2. New home sales fell sharply in April, a potential sign of weakening in the market amid rising prices and limited inventories

 

 

Company News

 

  1. Huntsman is near an accord to merge with Swiss rival Clariant, in an all stock deal that would create a chemicals giant with a combined market value of about $14B
  2. Fiat Chrysler was sued by the Justice Department, which alleged the car maker used illegal software to cheat on emissions tests
  3. Honeywell will decide whether to break off its aerospace division by the fall

 

 

Interesting News

 

  1. And they say being a college athlete is tough? The University of Georgia’s football team had a DJ booth installed in their locker room!
  2. More than 100 Olympic medals from Rio will be replaced as they are falling apart
  3. Imagine sitting in a coffee shop and working (ha! That’s a stretch, I hate those self-righteous people, anyways…) when a few loud patrons behind you start speaking very loudly. Their discussion? What to name their new company. So, this guy (the one “working”) promptly buys the naming rights and website to their new company – talk about passive aggressive! This actually happened somewhere in the UK
  4. A woman trying to buy a birthday card called police when she was accidentally barricaded inside a CVS store in central Florida. She entered the store at 9:50 and headed towards the checkout a shade after 10pm when she triggered a motion sensor alarm and found herself barricaded in. Funny aside, let’s be real, if you’re shopping for a birthday card at CVS, do you really need more than 3 minutes!?
  5. Grape, a 20-year-old Humboldt penguin at the Tobu Zoo in Japan was dumped by his “girlfriend.” However, he has found solace as he is now in love once more, this time with a cardboard cut-out of a Japanese anime character. 
  6. Amazing fact of the year: Cows that have lived for generations on sloped, mountainous land adapt to their environment by being born with front legs that are slightly shorter than their back legs to make grazing easier!

 

 

 

 

 

Commentary for the Week of May 15 – May 26, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

As we’ve seen so many times this year, the market decided that it could ignore what could have – or should have – been marker moving headlines: a bombing in the UK, a China credit-rating downgrade; a former CIA director fretting over potential Russian influence in the Trump administration; and a Federal Reserve intent on raising rates and shrinking its balance sheet.

 

It’s easy to imagine any one of these events causing the market to fall. Instead, stocks surged ahead. “...all of it could have delivered a bad week,” says Michael Shaoul of Marketfield Asset Management. He notes the continued strength shows “the markets want to go higher.”

 

If they do, it is difficult to foresee what might change that. Friday saw the release of May payrolls data, while earlier in the week durable goods orders and new home sales were released. All three economic indicators were mediocre or disappointing; but nary a blip was seen in the market!

 

Jim Paulsen – an independent strategist – chalks that resilience up to the better than expected data coming from abroad. In the past, when US data would weaken, the markets would worry that there was no one else to pick up the slack, and the market would experience its annual growth scare. But European economic data has been surprisingly strong in Germany, Japan, and even emerging markets are holding up better than might be expected. Such strength, says Paulsen, could limit the size of the drops in the US market, even if something like payrolls disappoints. “they matter less than they did previously just because there’s more growth in the world.”

 

 

 

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.

 

Raymond James is not affiliated with and does not endorse the services or opinions of Michael Shaoul, Marketfield Asset Management or Jim Paulsen.

 

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News for the week of May 15-19, 2017

News for the Week of May 15 – May 19, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

Government / Political / non-Economic

 

  1. Araba gulf states have offered to take steps to improve relations with Israel if Netanyahu makes what they would consider a peace overture to the Palestinians
  2. Merkel signaled openness to changes to fortify the EU as she met with new French President Macron
  3. Ex-FBI director Mueller was named as special counsel to oversee the federal probe into Russia’s alleged interference in the US presidential election
  4. The US announced new sanctions against Iran aimed at its missile program
  5. Former Senator Lieberman is said to be the leading contender to be Trump’s pick to run the FBI
  6. NATO is considering reviving a naval command to counter Moscow’s submarine activity in the Arctic

 

 

General Markets / Economic

 

  1. Russia and Saudi Arabia sent oil prices higher with a joint statement that cuts in output should be extended into March 2018
  2. Existing home sales climbed 1.4% in the first quarter to hit their fastest pace in a decade
  3. China’s economic activity slowed in many sectors in April after a strong start to the year, a possible early sign of softness
  4. OPEC is trying harder than ever to win over big investors, but the group is finding that falling oil prices are making that a tough sell
  5. Japan’s economy picked up speed in the first three months of 2017, extending a recent stretch of growth

 

 

Company News

 

  1. Ford aims to cut about 10% of its global workforce amid CEO Fields’ drive to boost profit and the auto maker’s sliding stock price
  2. Media firms are racing to be included in new “skinny” streaming bundles as consumers ditch pay-TV at a record pace
  3. Italy put Alitalia up for sale after months of fruitless talks with unions and the airline’s shareholders

 

 

Interesting News

 

  1. US farmers are seeking to boost milk production by pampering their dairy cattle. Some ways include: using waterbeds, playing country music, backscratchers (does anybody remember the children’s book by Doreen Cronin, “Click, Clack, Moo”?!)
  2. An Austin man is suing his date for $17.31 because she was texting during their viewing of Guardians of the Galaxy Vol. 2. The man says his date’s texting was a ‘direct violation’ of the policy at the theater and that his experience was ‘adversely’ affected by it. The best part? After letting his feeling be known to her, she then left the theater and drove away, leaving the man without a ride home. The cost includes the ticket of the movie and pizza. The petition read, “while damages sought are modest, the principle is important as defendant’s behavior is a threat to civilized society”

 

 

 

 

Commentary for the Week of May 15 – May 19, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

The stock market finally took off its blinders last week to the drama in the nation’s capital. The S&P 500 suffered its steepest decline since September 9th, 2016, as phrases like obstruction of justice and impeachment moved from the fringes of liberal fantasies into mainstream discourse; however, by week’s end, the focus returned to stronger-than-expected earnings and the market pared most of its losses.

 

For months, the market has shaken off legislative setbacks for President Trump’s agenda, including multiple revisions to its health-care plan, and turned out the turmoil in the White House. But reports are that Trump allegedly tried to get former FBI Director Comey to drop a probe into a former aide’s ties to Russia followed with the swift appointment of former FBI Director Mueller as special counsel to investigate.

 

According to Brian Nick of TIAA Investment, “when this turned from legislative frustration into a possible ongoing investigation that could suck up the oxygen to get anything done in DC, any residual optimism left for tax reform or other policies to stimulate economy growth fell perilously close to zero.”

 

Moving to the microeconomic news, the weight of corporate and economic events prevailed again last week. Stronger than expected homebuilder sentiment and rising oil prices lifted stocks at the beginning of the week, while strong earnings helped the market recoup midweek losses. As earnings season ends, the focus will turn to economics. Up next week are minutes from the Federal Open Market Committee, as well as a budget proposal from the Trump administration. Expect more volatility as investors tune in to congressional hearings and possible subpoenas, says Natixis Asset Management Chief Strategist David Lafferty.

 

 

 

 

 

 

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. 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. NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Index performance does not include transaction costs or other fees, which will affect actual investment performance.  Individual investor’s results will vary. Commodities’ investing is generally considered speculative because of the significant potential for investment loss.  Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.  Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index. Individual investor's results will vary. Past performance does not guarantee future results.

 

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