News for the Week of April 17-21, 2017

News for the Week of April 17 – April 21, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

 

Government / Political / non-Economic

 

  1. Russian bombers were busy “buzzing” the Alaskan shoreline last week
  2. The Navy confirmed that it didn’t send an aircraft carrier directly toward North Korea, despite representations by the WH that it was on its way. Doesn’t the Navy report to the President? How was there a miscommunication!?
    1. Fun trivia fact. The average aircraft carrier is only refilled with fuel ONCE in its entire lifespan!!
  3. Trump called for distributing more high-skilled worker visas to the highest paid applicants, a move likely to benefit tech firms
  4. Turkey’s vote on presidential powers contravened the law by changing ballot-counting rules, international observers said
  5. Clashes across Venezuela turned deadly as protesters sought to force Maduro to hold elections

 

 

General Markets / Economic

 

  1. Treasury yields resumed their steep decline as political uncertainty drove investors to buy bonds
  2. US housing starts fell in March, but not enough to signal a reversal from a long-term upswing
  3. Higher growth returned to China in the first quarter, with GDP expanding by 6.9% from the year earlier period

 

 

Company News

 

  1. Exxon applied for a waiver from sanctions on Russia as it seeks to resume its joint venture with state oil giant Rosneft 
  2. As expected, American Express reported lower earnings and revenue, hurt by the loss of its relationship with Costco
  3. Google plans to introduce an ad-blocking feature in the mobile and desktop versions of its Chrome web browser

 

 

Interesting News

 

  1. The US Air Force is dismissing a family’s claim that low-flying fighter jets scared a pet pony to death in the United Kingdom. The case has been referred to the UK Defense Ministry Office
  2. A couple from Lakeland, Florida have just set the record for the most cruises with Carnival Cruise Lines – at 200! Talk about brand loyalty. Now here was my question…will Carnival give them a free cruise, an upgraded suite? Nay! Instead, they got….wait for it, because it truly is ridiculous, bad ridiculous….a personal letter and photo opportunities with the crew. Talk about “loving your customers”
  3. Casinos in Las Vegas are now being more judgmental on whether to offer a player a free alcoholic beverage or not. I mean, first it was watered down liquor, now I have to wait until they think I’ve spent enough money to booze up!? Might as well not even gamble now!

 

 

Commentary for the Week of April 17 – April 21, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

The stock market put its recent woes behind it and broke a two-week losing streak. However, that alone was enough to cause worry as some of the market’s strength was driven by a small number of tech stocks, rekindling memories of the internet bubble. While it’s true that the 10 largest stocks in the S&P 500 accounted for 39% of the market’s gains during the first quarter of the year, according to Birinyi Associates data, it doesn’t’ have to be bad news for the overall market. Birinyi’s Laszlo Birinyi notes that there have been plenty of big gains that have been buoyed with a small number of stocks, including 1980, 1998, and 1999, when the S&P 500 posted gains of more than 19% despite the top 10 stocks being responsible for at least 40% of the move. He says, “our view is that it is another statistic that has no investment implication.”

 

The truth is more complex. Frank Gretz of Wellington Shields notes that only 25% of the stocks in the S&P 500 are above their 10-day moving average, suggesting a good portion of the market is suffering a short-term correction, perhaps explaining the queasy feeling so many investors have right now.

 

All this isn’t to say that there aren’t worries. In Washington, Treasury Secretary Steve Mnuchin talked up tax reform, which the market would love to see, but President Trump also rebooted his nationalist agenda, including the possibility of more tariffs on steel. That would be great news for US steel makers, but not so great for the rest of the market. 

 

Internationally, the markets continue to monitor the French election. Morgan Stanley’s Michael Wilson says a win by hard right candidate Jean-Luc Melenchon could cause a sizable drop in the market, while a victory by mainstream candidate Emmanuel Macron could bring a jump. Whatever happens, getting past the election will allow investors to focus on fundamentals. “we think this is the last major risk event before the summer, after which we can have the next move higher.”

 

 

 

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. 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.

 

To opt out of receiving future emails from us, please reply to this email with the word “Unsubscribe” in the subject line. 

 

 

News for the Week of April 10-13, 2017

News for the Week of April 10 – April 13, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

Government / Political / non-Economic

 

• Russia has been trying to cover up for the suspected Syrian chemical attack last week, senior WH officials said, adding that the US has concluded sarin gas was used in the assault

• Sean Spicer issued an apology after saying that Assad committed atrocities worse than Hitler’s

 

• The administration held out the prospect of wider retaliation against Syria and signaled a new push to remove the country’s divisive leader, as Rex Tillerson prepared to head to Moscow

 

• Alabama Governor Bentley resigned as a scandal stemming from an alleged extramarital affair mushroomed into a crisis that left him facing possible impeachment

• Trump has signed off on a policy approach to North Korea that involves increased economic and political pressure, while military options remain under consideration longer term

• Jeff Sessions directed federal prosecutors to pursue harsher charges against undocumented immigrants who commit crimes

• Twin blasts claimed by Islamic State struck Egyptian churches, killing at least 47, as anti-Christian terrorism escalated

• Stupid politics. Russia vetoed a UN Security Council resolution condemning the latest chemical attacks in Syria.

 

• There was a larger point to Trump’s notion that the UN is pointless, this would be a great example. Who cares if the UN condemns it, how about a bunch of countries just condemn it!?

 

General Markets / Economic

 

• Saudi Arabia has told OPEC officials that it wants to extend the group’s agreement to cut output

• Top global economic and finance institutions defended the role of The World Trade Organization (WTO), countering a Trump administration challenge

• Chinese banks are lending record volumes abroad as Beijing pushes to build infrastructure world-wide

• Trump says he has offered Xi more favorable trade terms for China in exchange for help on confronting the threat of North Korea

• Trump voiced strong support for NATO amid tensions with Russia, declaring he no longer views the alliance as “obsolete”

• Rising house prices are putting the largest metropolitan areas out of reach for slices of the US workforce

 

Company News

 

• Five KPMG partners were fired after the firm improperly obtained information about which audits its regulator planned to inspect

• Toshiba expressed doubt that it can survive in light of huge losses at its US nuclear subsidiary

• United’s CEO apologized for the forcible removal of a passenger from a flight in Chicago, seeking belatedly to quell a world-wide furor over the incident

 

• I get it, a bad thing happened, but honestly read your passenger bill of rights. You don’t have “ownership” of the seat you are in until the flight is airborne. It stinks that he got kicked off, wrong that he got injured, but he never had a “right” to that seat!

• All those on board were promised a reimbursement from United

 

• Barclay’s CEO is under investigation by UK and US regulators after he tried to unmask a whistleblower who criticized his hiring of a longtime associate

• Foxconn has offered as much as $27B to acquire Toshiba’s computer-chip business

• Swift and Knight are merging in a stock swap that combines two of the nation’s biggest trucking companies

 

Interesting News

 

• A judge in Manie is refusing to spare the life of a dog named Dakota, despite her being pardoned by the Governor last month. The bite-happy husky was declared dangerous for biting a smaller dog in February – the second attack in a single year.

 

• I don’t get any of this surprise. They are ANIMALS. They can NOT be told what to do. Be cautious when you approach them. If they bite, it’s MOST LIKELY your fault, there are some things an owner can do to cause such poor behavior in animals, how about we blame the owners as well!?

 

• While I typically steer clear of any sex talk here, this was rather funny. The owner of the infamous Bunny Ranch brothel near Carson City has announced plans to open a Raiders-themed bordello to cater to sports fanatics near Sin City. Proposed name is “Pirate’s Booty Sports Brothel”

 

• I ask this sincerely, are there really that many men and women looking to get naughty and simultaneously think about sports?

 

• Ugly people! Ugh, I just want to kill them. A 22-year-old Indian bride is behind bars after she brutally murdered her husband because he wasn’t handsome. The woman, who was only married for about a week, apparently grew so horrified by her husband’s looks during an argument that she smashed his head in with a stone at their home in Cuddalore, Tamil Nadu.

 

• The funniest part, if there is one, is that the woman tried to frame her crime as murder by running out of her house crying, saying someone had killed her husband.

 

Commentary for the Week of April 10 – April 13, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

Stocks fell across the board last week in quiet trading, with many market participants out for religious observances. Worries about the war in Syria, North Korean saber-rattling, and the coming French elections had investors reining in riskier positions and heading for safe havens.

 

With the S&P 500 falling 1.1% on the week, Steve Sosnick at Timber Hill trading notes that much of the damage came in the afternoon Thursday, as traders squared positions ahead of the three-day weekend. “Some people didn’t want to hold positions ahead of a long weekend” given geopolitical concerns. Giri Cherukui at Oakbrook Investments says the rally impetus from the so-called Trump trade seems depleted. “We’re approaching the three month point for the administration and Trump has promised a lot of pro-business policies, though there’s a bit more of a worry over whether those policies will get implemented.”

 

There is concern on the street that the US economy isn’t expanding as strongly as hoped. The recent unexpected rally in Treasury bonds has stock-market watchers worried growth is slowing. This creates a cautious backdrop ahead of what is supposed to be a good first quarter earnings season, which begins in earnest this week.

 

Market strategist at Jones Trading, Yousef Abbasi says “we’re expecting about 9% first quarter earnings growth, but the market is in a ‘show me’ state; earnings have to come through.” Michael Mullaney, of Boston Partners, concurs and adds that the back half of April could offer plenty of geopolitical events that might roil investors. He notes that French elections begin April 23; markets fear a victory by nationalist candidate Marine Le Pen. April 28 offers a potential double-whammy: the release of US GDP for the first quarter and the expiration of Congress’ continuing-resolution budget bill. If there is no agreement on the measure by then, the government could shut down the next day.

 

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. Index performance does not include transaction costs or other fees, which will affect actual investment performance.  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.

 

To opt out of receiving future emails from us, please reply to this email with the word “Unsubscribe” in the subject line.

News for the Week of April 3-7, 2017

News for the Week of April 3 - April 7, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

Government / Political / non-Economic

  1. The WH is proposing extreme vetting of visitors to the US, including forcing them to provide cellphone contacts and social media passwords
  2. Russian officials ID’d a man from Kyrgyzstan as the suicide bomber who caused a deadly subway-train blast in St. Petersburg
  3. North Korea launched a medium range ballistic missile off the east coast of the Korean Peninsula
  4. SCOTUS will weigh if firms can be sued by foreigners in US courts in a terror related suits
  5. The government began accepting H-1B visa applications but pledged to target outsourcing firms
  6. Trump can draw funds from his businesses without public disclosure, according to his revised trust
  7. Chelsea Clinton leaves door open for possible 2020 WH run, because she has…how much experience?
  8. US coal miners, COAL MINERS – the ones covered in black face because of their profession, have asked the WH to remain in climate pact
  9. Bannon was removed from the NSC principals committee and top intelligence officials were restored as permanent members
  10. The European Parliament toughened its stance on talks about the UK’s exit
  11. The US launched dozens of Tomahawk cruise missiles against a Syrian air base Friday

 

General Markets / Economic

  1. The Richmond Fed’s president stepped down after revealing his involvement in a 2012 leak of confidential information
  2. The US trade gap narrowed in February, in part because of a smaller trade deficit with China
  3. China’s yuan has been strengthening against the dollar, a rise that could weaken US claims of currency manipulation
  4. Factory activity grew at a healthy pace in March, while firms faced rising raw-materials costs
  5. Investors are dialing back expectations for a bit shift in US trade policy, boosting multinationals, emerging markets, and the peso
  6. Chinese firms issued $52.6B in US dollar bonds last quarter, up 72% from the prior period!
  7. The Fed agreed at its March meeting that it would likely begin shrinking a $4.5T securities portfolio later this year
  8. Private sector hiring remained strong with employers adding more jobs in March than expected

 

Company News

  1. A year after its failed bid to merge with Office Depot, Staples is in talks to several private-equity bidders about a possible sale
  2. Boeing agreed to sell up to 60 jets to an Iranian airline, despite uncertainty over the Trump administration’s stance toward Iran deals
  3. The NFL reached a deal with Amazon to stream 10 Thursday night games
  4. An Apple supplier raised the prospect of a patent fight after the iPhone maker said it would stop using its GPUs
  5. GE is weighing a sale of its lighting unit, the latest move in the conglomerate’s pivot away from consumer businesses
  6. Ford said it would start building electric cars in China to tap into a state-sponsored boom in green-energy vehicles

 

Interesting News

  1. More than 100 Navy instructor pilots have refused to fly over safety concerns. There was an interesting 60 Minutes piece on this a few months ago! The reason is that the oxygen system is potentially lethal. Pilots are required to use supplemental oxygen for every moment they are above 14,000 feet MSL and for every moment after 30 minutes they are above 12,500 feet.
  2. A homeless man was cited by the SF Police department for eating pizza at a downtown bus shelter
    1. Technically, eating is prohibited on public transit, however, his lawyer’s argument will be, “food prohibition doesn’t necessarily extend to bus shelters, just buses.” Silly San Franciscans!
  3. In preparing for their match against North Korea, South Korea’s women’s soccer team is preparing for loud cheers – I guess taunts is a better word – rated at 100 decibels!

 

Commentary for the Week of April 3 - April 7, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

Plenty happened in the markets last week, but you wouldn’t know it from the stocks’ final tally. The action started early in the week with the release of disappointing auto sales that caused everything car related to tumble. The S&P 500 bounced back the next day but fell apart again on Wednesday after the minutes from the March Federal Open Market Committee showed the Fed considering shrinking its balance sheet before year end while down in DC Paul Ryan played down a quick series of tax cuts. Thursday night brought a US missile strike in Syria while Friday saw March payrolls come in well below economists’ forecasts. Even Scott Clemons from Brown Brothers Harriman said “there were more than five days of news this week, I’m impressed by the resilience of this market.”

 

However, that resilience hasn’t bred confidence among some investors. When Thursday’s jobless claims showed Americans filing fewer unemployment claims from the prior week, somehow RBC economist Tom Porcelli tried to remind pessimistic clients, “the recession discussion is back in vogue.”

 

But Porcelli may be on to something, we may need to tamp down our confidence in an economic acceleration in the near term. The Atlanta Fed’s GDP estimate change by half, from a first quarter growth of 0.6% down from 1.2% a few weeks earlier. But David Rosenberg of Gluskin Sheff noted that last year saw a big snap back in GDP growth from the first quarter to the second.

 

But maybe the markets don’t need another snap back. The US economy hasn’t grown by more than 3.5% since the third quarter of 2014, yet the S&P 500 has returned 26% during that period. Ed Yardeni of the eponymously named research group put it succinctly, “If there’s no boom, there’s no bust.” How…enlightening?

 

If anything changed last week it was the fact that Yellen and company are considering curtailing their bond purchases. And just as the Fed’s bond purchases had the effect of making monetary policy even easier than it was, it could make money tighter as interest rates rise. As the Fed lets balance sheet roll off, then interest rates will be going up faster than you see just by looking at the fed-funds target.

 

 

 

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.

 

To opt out of receiving future emails from us, please reply to this email with the word “Unsubscribe” in the subject line. 

 

 

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