News for the Week of January 30-February 3, 2017

by David Abuaf, CFA

Investment Manager, RJFS

 

 

Government / Political / non-Economic

 

  1. President Trump’s executive order on travel bans caused confusion at airports across the country where some travelers were detained or diverted in transit
  2. The WH fired the acting attorney general after she instructed the Justice Department attorneys not to defend in court Trump’s executive order on immigration
  3. Homeland Security chief John Kelly has clashed with the White House over staffing and other decisions in recent days
  4. The WSJ is reporting that chances for cross-party compromise are dimming in the wake of Trump’s aggressive debut, potentially limiting the scope of what he can get done while in office
  5. And the hits just keep on coming! Ex-Representative Weiner could face child pornography charges over alleged exchanges with a 15-year-old girl
  6. Trump’s administration is set to impose new sanctions on dozens of Iranian entities for their alleged role in missile development and terrorism
  7. Trump vowed to repeal a ban on churches engaging in political campaigning, while his administration also was exploring other steps to expand religious rights
  8. The administration is taking a step towards temporarily stabilizing a key part of the ACA
  9. NATO shelved a plan to meet with Ukraine about missile defense, a new sign the alliance is trying to avoid provoking Russia. I honestly don’t get it. The alliance can STILL meet with the Ukraine and discuss this, just do it in private and make sure media doesn’t get wind of it! Don’t all these countries have “surveillance” and “spy” and what-not agencies that are geared arounds being sneaky!?

 

 

General Markets / Economic

    

  1. Major banks in the US and Europe said they remain firm in their plans for further investment in Mexico as trade-war talks heats up with the US
  2. Big oil companies and smaller US upstarts are plotting sharply divergent spending paths after a modest recovery in crude prices
  3. Home prices climbed in November, showing no signs of slowing even as mortgage rates began to tick up
  4. The Eurozone economy kept pace with that of the US last year for the first time since 2008
  5. Trump’s potential impact on business has been a point of discussion in earnings calls at many S&P 500 firms
  6. The Fed held rates steady while saying it remains on track to gradually raise them this year, but gave no hint on the timing of the next hike
  7. Many new vehicles are languishing at US dealerships as auto makers build cars at a near record pace despite softening demand – this strikes me as eerily similar to the past

 

 

Company News

 

  • A reminder of how interconnected everything you do and buy effects investments. Sony said they are writing down nearly $1B on its film and TV studio after a dismal year at the box office

 

 

Interesting News

 

  1. Many Indian residents are using antacids (Eno) in their pizza dough and cookie batter to “bring gastric delight” as a leaving agent in a variety of savory steamed cakes to the subcontinent. Even Indian restaurants in the US are using it!
  2. Transgender children who identify as boys will be allowed to join the Boy Scouts of America
  3. Some woman had her PET PYTHON stuck IN HER EARLOBE. I’m serious. I also saw a number of the pictures. It was not a large python, but it was stuck. It had gone through a large ear piercing hole.

 

 

 

 

 

Commentary for the Week of 01/30/2017 – 02/03/2017

 

by David Abuaf, CFA

Investment Manager, RJFS

Chart from Barrons

 

 

The Dow Jones Industrials Average needed a strong finish on Friday to end the week right back where it had started – above 20,000. Stocks began the week on the wrong foot, reacting to Trump’s hastily pushed through travel ban and to a few earnings disasters. Then Trump’s decision on Friday to roll back regulation on banks played a big role in getting the market’s juices flowing. Greg Woodward says, “this makes all the sense in the world, the market is moving on every bit of political news.”

 

The pickup at the end of the week wasn’t all due to Trump, of course. On Wednesday the Fed elected not to raise interest rates and Friday saw the release of January payrolls which revealed a large increase in jobs but with muted wage growth.

 

Many investors appear to assume that the next market move will be higher and that they will be able to see the next downturn “coming a mile away,” says Adam Parker, chief US equity strategist at Morgan Stanley. “we are worried there is potential arrogance in adopting this view.”

 

He points out that just over a year ago, stocks were still trying to find a bottom following a plunge that left nearly everyone shell-shocked – and that the S&P 500 has gained 20% during the last 12 months. “how can anyone be more bullish now?” Parker asks.

 

It’s a good question!

 

 

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

 

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