News for the Week of July 31 - August 4, 2017

News for the Week of July 31 – August 4, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

General Markets / Economic

                                                                                                           

1.     In July, the US posted a record 82nd straight month of job creation and an unemployment rate at a 16 year low, despite slow growth in output

2.     G-20 inflation fell in June to its lowest level in almost eight years.

·       This is NOT a good thing. If inflation falls, it makes it more difficult for Central Banks (the Fed, ECB, Bank of Japan, Bank of England, etc.) to raise rates without reducing the amount of discretionary spending its citizens can afford!

3.     Auto sales fell sharply in July, with the Detroit car makers feeling the brunt of the decline.

·       I’ve said it many times before…Focus on quality parts and products and safety! Parts that can last a long time are not “quality”, and safety cannot be measured immediately (JD Power Initial Safety rating – what on Earth is that!?).

 

 

Company News

 

1.     Google is developing technology to let publishers create visual oriented media content along the lines of Snapchat’s news product

2.     Toyota’s move to build a factory in the US is part of a larger plan to boost output in Mexico and Canada

 

 

 

Interesting News

 

1.     In an effort to woo more families, pubs in Britain are threatening to eject profane patrons

2.     Discovery Communications is acquiring Scripps Networks Interactive for $14.6 billion in a deal that is expected to boost the combined company's negotiating leverage with pay TV operators at a time when more people watch video online, the companies said.

3.     Facebook abandoned an experiment after two artificially intelligent programs appeared to be chatting to each other in a strange language only they understood.

4.     Writers for the Boston Globe and NJ.com are arguing about where Trump spends his vacations – namely why always in NJ and not in New England

 

 

 

 

 

Commentary for the Week of July 31 – August 4, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

 Let’s take a look at what happened this week – the Dow Jones Industrial Average rose to above 22,000. In this piece and many others that we at Forman Investment Services write about the markets, we almost never mention the Dow. We don’t look at the Dow as a reflection of the US stock market and here’s why.

 

The Dow is a concentrated portfolio of stocks weighed in a wacky way – by price. That means one stock, especially a high-priced stock, can have an outsized impact on the benchmark level. For a more accurate reading on the market, we look to the S&P 500. Due to its size and market capitalization weighting, no single stock can make it move on its own.

 

 

 

 

 

 

 

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.

 

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News for the Week of July 24-28, 2017

News for the Week of July 24 – July 28, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

General Markets / Economic

                                                                                                           

1.     Regulators have signaled they want to abandon plans to further regulate Wall Street pay, but events have already led to tighter controls

2.     Wildfires in Canada are pushing up the price of lumber, threatening the supply to US home builders

3.     OPEC ministers held talks about challenges to their oil-output-cutting deal ahead of a meeting in Russia

4.     OPEC is weighing a crackdown on members that aren’t curbing oil output as the group struggles with efforts to raise crude prices

5.     Existing home sales fell 1.8% in June from May and prices jumped as strong demand outstripped supply

6.     A pickup in global growth and a weakening dollar boosting profits at many US companies that do businesses overseas, helping support the years-long rally in the stock market.

7.     A top UK banking regulator said the LIBOR benchmark will be phased out over the next five years

 

 

Company News

 

1.     KKR is nearing a deal to buy health-information provider WebMD

2.     BMW denied it cooperated with rivals to manipulate diesel engines, after VW requested a probe

a.     Eh, I don’t believe BMW. Let’s see; it’s primarily the German auto companies that got caught on the emissions scandals, and all of them were on diesel engines.  Collusion is incredibly likely!

3.     Fiat Chrysler faces calls to buy back diesel vehicles that allegedly used emissions-cheating software

4.     Boeing shed more than 6,000 jobs in the first half, the fastest rate of staff cuts in over a decade

5.     Alphabet said its advertising business continued to grow rapidly but that ads on smartphones and YouTube videos are less lucrative than Google’s desktop ads

 

 

Interesting News

 

·       As many men probably know, typically March Madness in the US is also the time of the most vasectomy’s in the nation. However, vasectomy clinics are beginning to make the experience even more “bro-friendly,” as pals willing to spend a few thousand dollars are getting together for brosectomies at clinics that are looking more like club lounges. These brosectomies are typically a few male friends getting together for a vasectomy, then enjoying couches, big-screen TV, snacks, alcohol, steaks, etc.

 

 

 

Commentary for the Week of July 24 – July 28, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

It’s hard to ignore just how on edge the market seems to be, as every drop, no matter how small, is analyzed for signs that it’s the one that marks the end of the long bull market.

 

Jim Paulsen of Leuthold Group says “there’s a sense that many things are coming together that make you feel like you’re headed for a correction. There’s so much of that right now, that it almost would surprise me if it happens.” And for good reason. The S&P 500 has suffered two 15% drops since the bull market got going in earnest. According to Tony Dwyer of Canaccord Genuity, “the underpinnings for a major drop are just not there right now,” as he noted strong US GDP, earnings growth, and a weak dollar.

 

This doesn’t mean there won’t be sudden bouts of volatility. One event in particular has the potential to shake things up. This Friday we have the July payroll data coming out which could provide evidence of whether the Federal Reserve, which left interest rates unchanged last week, is ahead of or behind the curve. Just don’t bet on it, “the market appears bulletproof” says Ian Winder of Wedbush Securities.

 

 

 

 

 

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.

 

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News for the Week of July 17-21, 2017

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

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

General Markets / Economic

                                                                                                           

1.     Elon Musk warned of the potential dangers of artificial intelligence and called for a regulatory agency to guide its development

·       I’m including this otherwise non-economic news here, if only because I think it’s a play by Musk against Google’s and Ford’s autonomous driving cars!

2.     US pork belly prices have surged 80% this year to record highs, driven by a national craving for bacon

3.     The VIX index, a key gauge of market volatility (measuring volatility in 1-month Option prices), hit its lowest level in almost 24 years

·       While I am a disbeliever in technical analysis, I am a believer in market cycles. As such, while a low volatility market might be good, that also means that we are bound to have a higher volatility market soon too. This does NOT mean LOWER returns, it just means more volatility in the market from one week to the next.

4.     US and China economic talks ended without any concrete agreement or future agenda

5.     Japan’s central bank pushed back its forecast for reaching 2% inflation, while keeping policy on hold

6.     Foreigners are buying homes at a record rate, helping push up prices in coastal cities already squeezed by supply shortages

 

 

Company News

 

1.     Nelson Peltz is planning to launch a fight for a P&G board seat, which would make the consumer products giant the largest company to face a proxy battle!

2.     Boeing and Airbus are facing competition from three new makers of single-aisle commercial jets in China, Russia and Canada

3.     McCormick agreed to buy Reckitt’s food unit for $4.2B, the latest in a wave of packaged-foods deals

4.     Discovery is in talks to combine with Scripps Networks, a deal that would unite two firms trying to chart a course in a cable-TV industry that is facing massive pressure (I cut my cord almost 8 months ago!)

5.     Daimler said it would tweak the engine software on diesel vehicles amid emissions-cheating probes

 

 

Interesting News

 

·       A man in Texas was trapped inside an ATM for hours. Because of the small enclosure, his voice wasn’t able to transmit well, however he wrote/pleaded for help on people’s receipts. Many thought it was a joke, turns out it was not. He was actually a technician who forgot his phone in his car and the door accidentally closed on him

 

 

 

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

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

It’s earnings season once more, and the market is focused on just that – something tangible on which to finally focus.

 

Some 97 S&P 500 companies have reported earnings so far and 74% have topped analyst expectations, according to Thomson Reuters, above the four-quarter average of 71%. Sales have been nearly as strong as 72% have topped expectations versus four quarter average of 56%. All in all, second quarter earnings are expected to grow by nearly 10%!

 

As you may have noticed, the US dollar has been weak this year, having shed more than 7% against its trading partners in 2017. Dubravko Lakos-Bujas at JP Morgan notes that S&P 500 earnings per share typically rise by about 1% for every 2% decline in the greenback, so second quarter earnings could be even higher than 10%.

 

The biggest strength on the year has been technology, and there’s no way to play down its recent strength. After getting beaten up in June, the sector has gained 5.5% in July. As it stands, tech’s 10-day advance decline line hit its fifth highest reading EVER last Thursday. While common sense might say such strength should result in a pullback, Paul Hickey of Bespoke Investment Group has noted that during the 17 instances of elevated advance decline line readings during the year, those sectors experienced a nearly doubling of return over the period versus the benchmark!

 

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.

 

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