News for the Week of August 7-11, 2017

News for the Week of August 7 – August 11, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

 

General Markets / Economic

                                                                                                           

1.     Wall Street regulators imposed far lower penalties in the first six months of Trump’s presidency than they did during the first half of 2016

2.     Value stocks are mired in one of the worst stretches on record as investors choose companies with fast profit or price growth

3.     US consumers are most likely to feel the impact of Libor’s demise in adjustable rate mortgages

4.     China’s foreign exchange reserves rose for a sixth straight month in July

5.     Worker productivity rose modestly last quarter but showed little sign of breaking out of the sluggish trend that has held back economic growth

 

 

Company News

 

1.     Apple plans to introduce a cellular enabled smartwatch that won’t need an iPhone

2.     Tesla set plans to raise $1.5B through the sale of junk bonds, as the firm seeks to sharply increase its manufacturing capability

3.     Disney said it is starting two online streaming services to offer its content directly to consumers and that it would pull future movies from Netflix

 

 

Interesting News

 

Some guy scheduled SIX dates in one NIGHT in Washington DC. His “story” was that he was meeting “friends,” so date 1 was there as date 2, or “friend”, came into the bar and then he would leave date 1 to hang out with date 2. Fast forward 45 minutes and date 3 would walk in to the bar.  As this escalated, date 1 was beginning to steal away dates 2 to 6 from the guy and the girls all became friends and the guy left the bar, alone. 

 

 

 

Commentary for the Week of August 7 – August 11, 2017

 

by David Abuaf, CFA

Investment Manager, RJFS

 

News that North Korea had been able to build a nuclear warhead small enough to place atop a missile was all that was needed to sink the market; through some gasoline on the fire, “The US military is locked and loaded to respond to any provocation,” and it was bound to be a bad week.

 

However, no need to shake in your boots too much. Geopolitics has a way of shaking stocks, but rarely does the damage last. Take the Iraqi invasion of Kuwait in 1990; the very next day the S&P 500 dropped 1.1%, and for the next three months, it continued to fall.  However, 250 trading days later (roughly 13 months), the S&P 500 was up 10% since the first day of the invasion! Even the Cuban Missile Crisis in 1962 resulted in a big drop, 6%, that was quickly erased. Stocks are driven by economic growth. For a geopolitical event to derail a bull market, it would have to hamper the US economy as well!

 

Let’s talk about the economy. Confidence remains high on the part of consumers and producers. Productivity continues to rise and the consumer price index is advancing at a rate comfortable for most economists (i.e., rise well enough that the Fed will raise low rates up). While none of this is “exciting,” it doesn’t point to a recession either – the one thing guaranteed to bring bull markets to their knees!

 

 

 

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

 

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