News for the Week of March 20 – March 24, 2017
by David Abuaf, CFA
Investment Manager, RJFS
Government / Political / non-Economic
- Prime Minister of India, Modi, appointed a hard-line Hindu politician to lead India’s most-populous state, marking a swing toward religious politics
- The US and Britain banned most electronics larger than a cellphone in the cabin on flights from a handful of countries in the Middle East and North Africa – I have read a lot about this story and still don’t understand why
- Federal prosecutors are building cases that would accuse North Korea of directing the theft of $81m from Bangladesh’s account at the NY Fed
- A suspected Islamist terrorist mowed down scores of pedestrians on a London bridge before crashing his car near Parliament and stabbing a policeman, leaving at least four people dead
- Neil Gorsuch’s Supreme Court confirmation hearing took a dramatic turn when the high court overruled a decision partly based on a precedent the nominee had written!
- A partisan rift on the House Intelligence panel is clouding the future of a probe into alleged Russian interference in the 2016 election
General Markets / Economic
- World finance chiefs struggle to find common ground on boosting trade in a global economy that shows faint signs of momentum
- Saudi Arabia is losing its grip on oil markets it once dominated amid a deep output cut that has reshaped global petroleum trade routes and benefited rivals
- Intel is starting to ship storage drives based on new technology it hopes will reshape the market for computer memory
- Vodafone said it would merge its Indian business with Idea Cellular, a move that would create India’s largest wireless company
- Sears raised doubts about its ability to keep operating after seven years of losses
- Now this is truly wackadoo – Theranos plans to give additional shares to investors who pledge not to sue the battered blood-testing firm or CEO Holmes
- A couple in the UK were found dead in their car after breathing in poisonous fumes from the air vents caused by a vehicle modification
Commentary for the Week of March 20 – March 24, 2017
by David Abuaf, CFA
Investment Manager, RJFS
Late Friday the GOP pulled their own health-care bill before it could be voted on; while that hasn’t pulled the rug out from under the bull market, it hasn’t been wonderful for the markets! In fact, it was the Dow Jones Industrial Average’s worst week since September 2016. This is meaningful because such a loss would seem to justify the talk on the Street that the failure to repeal Obamacare jeopardizes the Trump administration’s tax and infrastructure plans. The fact that the worst performing stock in the S&P 500 on Friday was Martin Marietta Materials (MLM), which supplies the gravel and stones used in roads and other infrastructure projects, would only seem to add to the evidence.
This has only led to bears looking for danger in every piece of data. Bank lending, for instance, has slowed since the election, and some observers have pointed to that fact as a sign that the animal spirits that were supposed to juice the economy have been a mirage. However, Torsten Slok at Deutsche Bank notes that bank lending is a lagging indicator and follows the ISM Manufacturing survey with a delay. The fact that the ISM data has been rising suggests that bank lending could increase in the months ahead, “it’s a red herring.”
And it just might be a sign that this remains the most hated bull market in history. While some investors believe the recent rally has been built on smoke and mirrors, Jason Trennert of Strategas Research Partners, notes that on his checklist of nine factors that precede a market top, only one (slowing upward earnings revisions) is currently flashing red. Trennert says, “I could see the market going down for a couple of days, but I’m otherwise bullish!”
All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services.
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