News for the Week of June 20-24, 2016

News for the Week of June 20 – June 24, 2016

by David Abuaf, CFA

Investment Manager, RJFS

 

Government / Political / Economic

1.     France called for EU sanctions on Russia to remain until the Ukraine peace process is finished

2.     Talk about the obvious…doctors who received a single free meal from a drug firm were more likely to prescribe the drug it was promoting than doctors who hadn’t, according to a study. I wonder how rigorous that study actually was

3.     The Senate rejected four proposals to tighten the nation’s gun laws. Can we just agree that every American has the right to own guns, but that process of owning one should take longer than 1 minute at a gun show? Change can happen without removing or changing our inalienable rights!

4.     New York’s legislature passed a bill that would legalize fantasy sports. I’m sure the millions of dollars in tax revenue lost have something to do with that!

5.     A new projection shows that Social Security and Medicare will begin to spend more than they earn by the end of the decade

6.     British voters voted to leave the EU. Prime Minister David Cameron said he would step down after the vote.

7.     SCOTUS sank Obama’s immigration plan and upheld race-based college admissions

8.     Islamic State has posted digital propaganda in Portuguese in a challenge to Brazil ahead of the Olympics

 

General Markets / Economic

1.     Yellen said the chances of recession this year are “quite low”

2.     The greenback really is fantastic! Nigeria’s currency dropped more than 40% in one day against the dollar after the central bank ended the Naira’s peg. I used to work for a company with significant operations in Nigeria (no, I wasn’t the Prince’s treasurer), and what’s amazing is that back then, even as a legitimate company, we never traded on the official currency, but always the black market and constantly realized a 25% mark down in value. I wonder what this effect will have on the black market currency

3.     The share of Americans with subprime credit has fallen to the lowest level in over a decade, a trend that could boost lending

4.     Prime Minister David Cameron pledged to pursue greater EU overhauls if Britons back his call to stay in the bloc

 

Company News

1.     Tesla offered to buy SolarCity, a deal that would unite the Musk backed electric car and solar energy firms

2.     Boeing tentatively agreed to sell jetliners to Tehran, valued at up to $25B

3.     Walmart struck a deal with one of China’s top e-commerce companies

4.     US antitrust regulators have expressed concerns about Anthem’s deal to buy Cigna and are skeptical that the firms can offer adequate concessions (that was me, yours truly, who originally expressed skepticism!)

5.     Ha! Mexican authorities didn’t know that the owner of the nations’ leading drug distributor was behind the purchase of a rival when they approved the deal last year. Dummies!

 

Interesting News

1.     The father of a 49 year old Utah businessman, living in Beverly Hills (that’s the father), took out a full page ad searching for a wife for his son in a Coeur d’Alene, Idaho newspaper. Funny thing, the son is fairly attractive, I don’t see why he needs any help from his dad; maybe daddy wants to be a grandpa soon?

2.     A jaguar, used as part of the Olympic ceremonies in Brazil was shot to death after it tried to attack a soldier

 

 

 

 

Commentary for Week of June 20 – June 24, 2016

by David Abuaf, CFA

Investment Manager, RJFS

Chart from The Wall Street Journal

Chart from The Wall Street Journal

 

Financial markets round the world slumped Friday, blindsided by the previous day’s stunning Brexit vote. The major US stock indexes fell nearly 4% on Friday and finished down over 1% on the week, after having been up 2% just before Thursday’s referendum!

 

The UK’s decision to leave the EU isn’t good for US equity market sentiment in general, with investors already jittery about US and global growth, and trade. Brexit has heightening fears about both the free flow of capital and nationalism. The vote also means the Federal Reserve will most likely hold off raising interest rates.

 

According to Kate Warne, an investment strategist at Edward Jones, Brexit is a reminder that “you don’t invest based on polls.” The exit will probably take a few years to unfold. The keys to whether the US economy is affected significantly will be whether equities tumble enough to have a major impact on business and consumer confidence, and whether banks are so affected that they pull back on lending.

 

 

 

 

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

 

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