News for the Week of February 5-9, 2018

PLEASE NOTE: The stories reported below are for informational purposes only to educate our clients on the weekly news stories; real, funny, educational, and otherwise. The source of charts and most news will stem from the Wall Street Journal (WSJ), Financial Times (FT), Barrons (B), Business Week (BW), and Bloomberg (Bbg). The purpose of this is NOT to solicit any offers to buy or sell stocks, mutual funds, commodities, or other financial assets – merely to report the news. Please call us to discuss any investment questions you may have. Additionally, we will not take sides in any political or religious news that we report, we will only present the objective facts, and perhaps opine on them from a neutral perspective. Finally, the opinions represented are those of David Abuaf, and not necessarily of Forman Investment Services or Raymond James or its affiliates.

 

News for the Week of Feb 5 to Feb 9, 2018

 

by David Abuaf, CFA

Investment Manager, RJFS

 

General Markets / Economic

                                                                                                           

1.     The Bank of England said it is likely to raise rates at a swifter pace than it expected to just several months ago

2.     The European Union raised its forecasts for eurozone growth, but also warned of market risks

3.     Trucking companies in January ordered the most new big rigs in nearly 12 years, amid a hot freight market

4.     Banks are shutting branches at a record pace as they leave less profitable areas and teller use declines

 

 

Company News

 

1.     Amazon is preparing to launch a delivery service for businesses that would position it to compete directly with UPS and FedEx

2.     Qualcomm rejected Broadcomm’s sweetened bid of more than $121B but opened the door to talks

3.     Tyson’s CEO said rising freight and labor costs will lead to higher meat prices for US consumers

4.     BlackRock is looking to raise over $10B to buy and hold stakes in companies replicating the approach of Berkshire Hathaway

 

 

Interesting Stories

 

1.     Oh my, I just read a silly article how people are upset with Talenti Sorbetto. Not because of the taste, rather they like the taste but are complaining about how hard it is to open the plastic lid!

2.     The trend amongst US high school Debaters is to now make their argument at 300 words a minute. I couldn’t even understand 5 words!

 

 

 

Commentary for the Week of Feb 5 to Feb 9, 2018

 

by David Abuaf, CFA

Investment Manager, RJFS

 

So, now we know what a correction feels like. Yes, it was painful, but there was a curious sensation about this one.

 

While the S&P 500 fell 5.2% on the week, on Thursday the S&P 500 had dropped more than 10% from its January 26 high, the definition of a correction, though it made back some of those losses on Friday.

 

And what a strange correction it has been. Unlike the past ones, this one was caused by fears of too much growth, rather than concerns there wouldn’t be enough. Economic data continues to come in strong with the Atlanta Fed GDP estimate of 4% growth this quarter and companies continue to report strong earnings and upbeat guidance.

 

According to Martin Fridson of Lehman Livian Fridson Advisors, “there is nothing pointing toward recession.” In spite of the fact that everyone was calling for a correction – I’ve personally heard way too many of those calls from people with no business even following the markets – the markets still need a narrative; and so, its latched on to the Fed being so far behind the curve that inflation will spike and bonds will soar.

 

History suggests that this correction isn’t the end of the bull market despite the chaos. In fact, trading action suggests that the market could be close to finding a bottom, with the S&P 500 holding its 200-day moving average and in fact creating a strong buying opportunity, says Robert Sluymer of Fundstrat. While it doesn’t mean the 200-day average will hold again, there is no reason to call the end of the bull market just yet.

 

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services. All opinions are as of this date and are subject to change without notice. Raymond James is not affiliated with a and does not endorse the services or opinions of any of the quoted professionals or their respective firms/ publications.

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.

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News for the Week of January 22-26, 2018

We’re looking for a Client Service Specialist to join our team!Job details are available on our website at www.formanis.com/careers

  

News for the Week of January 22 – January 26, 2018

 

by David Abuaf, CFA

Investment Manager, RJFS

 

General Markets / Economic

                                                                                                           

1.     The IMF forecast strong growth in the global economy in 2018

2.     A US truck shortage is forcing thousands of companies to make tough choices about their shipments

3.     Existing home sales fell in December, but 2017 was still the best year for the housing market in over a decade

4.     The EPA is withdrawing a decades old air policy aimed at reining in some of the largest sources of hazardous pollutants

5.     New home sales in the US lost steam in December, but turned in a year of solid growth

6.     New tax rules are hastening automation and modernizing in US factories (i.e., US jobs are reducing)

7.     China’s central bank is looking to rein in the yuan, which has risen 3% against the dollar this month

 

 

Company News

 

1.     An FDA advisory panel said there wasn’t enough evidence to support Philip Morris’ claim that its IQOS device (e-cigarettes) reduces the risk of tobacco related disease

2.     Dell is considering going public (after their LBO years ago when the mobile revolution took force)

 

 

 

 

Commentary for the Week of January 22 – January 26, 2018

 

by David Abuaf, CFA

Investment Manager, RJFS

 

The US equity markets had another strong week, with the S&P 500 rising 2.2%. This was the 14th record high of the year, and we’re not even done with January. So, the market is feeling good, party on, right?

 

Maybe, Thomas Lee of Fundstrat Global notes the S&P500’s rise has gone parabolic. It’s 6% plus gain this month trounces the 2% average monthly advance from September to December 2017. Rather than being worrisome, these accelerations into the new year have historically led to even more upside. Only eight other times has the market played out like this, and of those 6 times the average gain was over 20% over the remainder of the year! If that scenario plays out, Lee says the S&P 500 could close the year near 3350.

 

But there’s also a point where feeling good leads to bad behavior. The US GDP rose at an annual rate of 2.6% during the fourth quarter; while high, this missed economists’ forecasts of 2.9%. But dig into the numbers and you see one area of major strength – consumer spending, which grew at a 3.8% clip. But not everyone is celebrating. Gluskin Sheff’s chief economist, David Rosenberg notes that rising market have made Americans feel wealthier, so they’ve been spending more and saving less, “this is a classic late-cycle development.”

 

Consumers aren’t just spending money on clothes, cars, and whatever else catches their eye – they’re also buying stocks. Investors have put $24B into equities during each of the two most recent weeks, notes Bernstein strategist Inigo Fraser-Jenkins – a big change from 2017 when they withdrew $9B during the last six months of the year.

 

While that is not worrisome – yet – but if investors buy stocks at just half that rate in the next four weeks, it could be. “We are not saying that will happen, but it quantifies how sentiment can change,” notes Jenkins.

 

 

 

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services. All opinions are as of this date and are subject to change without notice.

 

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.

 

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News for the Week of January 16 – January 19, 2018

We’re looking for a Client Service Specialist to join our team! Job details are available on our website at www.formanis.com/careers

  

News for the Week of January 16 – January 19, 2018

by David Abuaf, CFA

Investment Manager, RJFS

 

General Markets / Economic                                                                                              

1.     The Fed’s supervision chief called for looser capital and liquidity rules for banks

2.     China’s economic growth accelerated in 2017, but there are signs momentum is fading

Company News

1.     Archer-Daniels-Midland Company (ADM) made a takeover approach to crop trader Bunge, setting up a possible bidding war with Glencore

2.     Celgene is in talks to buy Juno, days after unveiling another deal to bolster its portfolio of blood cancer drugs

Interesting Stories

1.     Luxembourg is offering citizenship to Britons to allow them to live and work in the EU after the UK departs the bloc. However, in order to pass the citizenship, these Britons need to become fluent and be able to pronounce such words as: schnuddelhong, gromperekichelcher, and foussgänger

2.     Good news if you like spicy food.  “The Fiery Death with Hate Sausage” is a pizza loaded with a mix of peppers including Bhut Jolokias, Trinidad Moruga Scorpions and Carolina Reapers. However, you need to sign a waiver acknowledging you are an “idiot” for trying the pizza and will absolve the restaurant of any responsibility. Dear clients, I want to hear your stores. The place is in Columbus, Ohio at Mikey’s Late Night Slice. As your mother, I cannot force you to do anything, but as an older brother…hint… hint….

3.     New dads are becoming stupider. They are seen in places like Charleston, South Carolina wearing SWAT vest “carriers” to avert diaper bag emasculation (because people won’t judge you for having a newborn but they will question your manhood for carrying a bag for a baby?) and not just buying blankets for baby Beatrix, but they have to be camo blankets, because we all know little Cameron is an Army Ranger in training. (Thank you, WSJ, for this story). 

Commentary for the Week of January 8 – January 12, 2018

by David Abuaf, CFA

Investment Manager, RJFS

Let’s talk about bonds. The 10-year Treasury yield closed at 2.639% last week, its highest since July 2014. There are many people who believe that yields can just keep heading higher without dinging equities, as long as increases are driven by growth and inflation. Others contend that it’s the speed of the move that will determine whether stocks rise or fall. Quincy Krosby at Prudential says, “the market doesn’t like quick moves, that often gives it the jitters!”

Not everyone is so sure. Jim Paulsen of Leuthold Group notes that bond yields have been trending lower for the past 38 years and have remained within one standard deviation for 72% of teat time. This is important because the 10 year is now above the current one standard deviation mark of around 2.44%. Paulsen notes that when it does deviate, equity returns were markedly lower than when yields were in the range. The S&P 500 has advanced an average of 2.7% during the 12 months following such an instance, versus an average of more than 10% when yields remain contained within the bands.

David Ader of Informa Financial takes it a step further. He wonders if you can be bearish on Treasuries (bond prices fall as yields rise) and still be bullish on stocks. He notes that the dividend yield of the S&P 500 has widened to about 0.6 of a percentage point in favor of Treasuries. The wider that gap grows, the more enticing bonds will become to investors who still need yield, “My target is 2.85% to 3%, if we reach that, the equity market will go the other way.”

 

  

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services. All opinions are as of this date and are subject to change without notice.

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.

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