News for the Week of July 25 - 29, 2016

News for the Week of July 25 – July 29, 2016

 

by David Abuaf, CFA

Investment Manager, RJFS 

Government / Political / non-Economic

 

1.     The IOC stopped short of banning Russia’s entire delegation from the Rio Olympics due to state sponsored doping, but still banned the entirety of their track and field team

·       Some members will be able to compete, albeit for a neutral team

2.     Democrats forced the resignation of the party’s chairwoman on the eve of their convention after a trove of hacked emails showed them trying to undermine Sander’s campaign

a)    A) if you’re going to do something bad, at least try not to get caught...delete the emails or USE A PHONE! B) I sincerely doubt that Sanders ever stood a chance of winning the majority of Democrats let alone a general election, even against he who shall not be named

b)    Let me see if I get this right, as long as I am a narcissistic, bigamist, xenophobe with no political experience (Trump), make enemies with the entire party (Cruz), go against what a free-market country stands for (Sanders), while committing acts of treason and not being punished (Clinton), I have a strong chance of being nominated as a major party’s presidential candidate? It’s true…politicians in my day WERE more honest

c)    At least Ultra-left wing Sanders supported Clinton – and we all know he doesn’t mean it…ball’s in your court Cruz

3.     A knife attack in Japan at a facility for the disabled left at least 19 people dead and 20 more injured

4.     Over 100 Chinese have joined Islamic State in Syria

5.     Merkel said she wouldn’t budge from her policy of accepting refugees despite recent terror attacks by asylum applicants

6.     Media outlets in France are censoring coverage of terrorist attacks to avoid glorifying perpetrators

 

 

 

General Markets / Economic

 

1.     New reports are emerging that millions of barrels of oil are being stored in locations outside the scope of industry trackers, making for more cryptic and volatile markets

·       A glut of gasoline, combined with the overproduction of oil, has sent crude prices sliding

2.     Europe’s travel industry has been hard hit by the spate of terror attacks, casting a pall over airlines, hotels and retailers

3.     The Fed kept rates steady but opened the door to a rise later this year, possibly as early as September

4.     The CFPB unveiled an outline of new rules to rein in aggressive practices in debt collection

5.     US oil prices fell to near $41 a barrel and have tumbled close to bear-market territory since early June

6.     The homeownership rate in the US fell to 62.9% last quarter, the lowest level in more than 50 years

 

 

 

Company News

 

1.     Verizon has agreed to buy Yahoo for $4.8B, ending a drawn-out auction process for the beleaguered internet company

2.     A study found that the best paid CEOs tend to run some of the worst performing companies, and vice versa

3.     Apple has tapped a senior executive to oversee its secret, autonomous electric-vehicle initiative

a.     If it’s so secret, how do we know about it?

b.     Would Apple tap a junior executive to oversee this? – unlikely

4.     Boeing said it might stop making the 747

5.     Analog devices agreed to buy chip maker Linear Technology in a $14.8B cash and stock deal

6.     Mobileye is ending a supply agreement with Tesla in the wake of a high profile traffic fatality

·       Mobileye is the company that makes cameras for the back of your car, for when you drive in reverse

7.     Oracle agreed to buy NetSuite for $9.3B in a bid to bolster its cloud-computing offerings

 

 

 

Interesting News

 

1.     Mmmm…Donuts. A man’s corpse was discovered on a bench outside the original Cronuts bakery shop in SoHo – but at least a dozen pastry craving customers persisted in lining up alongside the tragedy to get a Cronuts

2.     Well, this is a new one for me. The co-owner of a bridal shop in Zelienople, Pennsylvania (I double and triple checked the spelling) has been charged with indecent exposure after three women reported him standing naked next to mannequins in the store’s display window.

3.     Remember the ice bucket challenge for ALS? Because of the challenge and the money that went to ALS, a new gene has been found specific to the disease!

4.     Children in Swaziland returned late to school this week because the world’s last monarch – King Mswati III – demanded that they weed his fields

5.     Jessie Gallan – Scotland’s oldest woman at 109 – ascribed her longevity to eating lots of porridge and avoiding men, “They’re just more trouble than they’re worth”

 

 

 

 

Commentary for Week of July 25 – July 29, 2016

 

by David Abuaf, CFA

Investment Manager, RJFS

Chart via The Wall Street Journal

Chart via The Wall Street Journal

 

The economy fizzled, the Fed wavered, and the stock market waddled downhill. A week of lively news in the political and economic worlds did little to rouse investors, as the major indexes fell amid weak trading volume. Notably, the S&P 500 fell 0.1%.

 

The Fed surprised no one by holding interest rates steady on Wednesday, but it opened the door to a rate hike in September, noting that “near-term risks to the economic outlook have diminished.” The Commerce Department reported that GDP rose 1.2%. After the news from the Commerce Department, the futures market put up a 20% chance that the Fed would raise rates in September, down from 30% on Thursday.

 

According to Ryan Larson at RBC Global Asset Management, “in the past couple of weeks, it’s apparent that the summer doldrums have set in.” An easy way to tell is the volume of trades taking place; and volume in July on the NYSE was 15% below the yearly average,

 

Jason Pride from Glenmede, said that about 64% of the S&P 500 companies that had reported as of earlier last week had beaten estimates. Additionally, he said analysts appear to be getting more optimistic, which is a “healthy underpinning for the market.”

 

Coming up next week, manufacturing data from China, a rate decision by the Bank of England, and July US jobs numbers could move stocks.

 

 

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. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. 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. 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.

 

C16-037691