News for the Week of November 28-December 2, 2016

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News for the Week of 11/28/2016 – 12/02/2016

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

Government / Political / non-Economic

 

1.     The UN security Council is set to adopt a resolution aimed at slashing North Korea’s coal-export revenue

2.     France’s Hollande said he wouldn’t stand for re-election in May, why? Could be he has the lowest approval ratings on record ever for a French president

3.     The Senate unanimously approved legislation reauthorizing sanctions against Iran for the next decade. I guess both sides of the aisle can agree on something! But agreeing on 1 out of 1,000 things isn’t exactly good

4.     Background checks for gun sales rose in November for a 19th straight month despite receding concerns about tougher gun laws

 

 

General Markets / Economic

                                                                                                           

1.     Global oil producers are preparing for the prospect of a decline in demand by diversifying intro petrochemicals, gas, and alternative energy

2.     Online spending during Thanksgiving weekend grew at the expense of store spending for a second year in a row

3.     US home prices climbed back above the record reached over a decade ago, stoking optimism for a more sustainable expansion

4.     US light vehicle sales rose 3.5% in November from a year earlier, helped by Black Friday deals

·       The delinquency rate for US subprime auto loans last quarter climbed to the highest level since 2010

5.     OPEC reached a deal to cut oil production by 1.2m barrels a day

 

 

Company News

 

1.     Carrier agreed to keep roughly 1,100 jobs in Indiana that it had planned to shift to Mexico

2.     Praxair moved to restart talks with Germany’s Linde over a merger to create an industrial-gas giant

3.     Uber argued before an EU court that it isn’t a transportation firm, as it fights European regulation

4.     Starbucks’ Schultz is stepping down as CEO to lead…wait for it…an effort at the firm to build high-end coffee shops…I thought they already sold at the high end!

5.     Denmark’s Maersk Line agreed to buy German container shipper Hamburg Sud for $4B

6.     RBS failed a Bank of England stress test, requiring the lender to add about $2.5B in capital

 

 

Interesting News?

 

·       I’ve been deficient in my duties of finding weird news this week. Instead here’s an awesome recipe I invented for beef brisket WITH bbq sauce. It’s awesome because you can taste the very flavor of smokiness and barbecue without stepping outside or using fake smoke or a smoker!

·       On the bottom of a roasting pan place strips of bacon (not overlapping). Place the brisket on top with fat side down – I also suggest putting a dry rub on the brisket, I prefer a BBQ dry rub. Take more bacon strips (some of you are loving this already) and cover the brisket with the bacon and fold any remaining bacon underneath the brisket. Cover pan with foil and cook for 3-4 hours on 275 degrees. Afterwards, flip brisket over, turn off heat and place back in oven (covered with foil) for one hour.

·       For the sauce: reserve accumulated juices; chop up the bacon that was used; cook bacon for 5-7 minutes until fat is rendered. Add half to one whole onion, minced/finely chopped, and cook 4-5 minutes. Take off heat, stir in ½ cup cider vinegar, ¼ cup brown sugar, ¼ cup molasses (feel free to add more if you want thicker sauce), 1 cup ketchup, reserve juices (but skim the fat off of it), and return to heat and simmer for 15- 20 minutes. This is now chunky, if you prefer, you can use a hand blender or move everything to a regular blender to reduce chunks of bacon and onion. Add in a few chopped chipotle peppers in adobo and stir. Top brisket with the sauce and broil for 3-6 minutes. Take out, let rest. Enjoy!

  

 

            Commentary for the Week of 11/28/2016 – 12/02/2016

 

by David Abuaf, CFA

Investment Manager, RJFS

Chart from Barrons

 

 

After three weeks of big gains that began with the Donald’s win, the S&P 500 finally finished a week in negative territory. What little macroeconomic data that was released was actually positive, with the unemployment rate dropping to its lowest level since 2007 and personal income grew more quickly than expected in October. Compound that with OPEC finally agreeing to cut production.

 

But the pause seems to be more a case of the market needing to stop and catch its breath after coming so far so fast since the election, says Jason Ware at Albion Financial Group. However, we did see a massive sector rotation as technology dropped 2.9% last week while Energy stocks gained 2.6%. We also saw financials and materials do well while consumer staples and utilities suffered. That market action is a sign that investors are no longer buying stocks whole hog, but are rotating their money from one part of the market to another, says Michael Shaoul of Marketfield Asset Management. Interestingly enough, according to Paul Hickey of Bespoke Investment group, stocks with P/E ratios under 10 had gained 11% since the election while those with P/E ratios above 20 picked up only 1.7%.

 

 

 

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

 

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