News for the Week of February 19-23, 2018

News for the Week of

February 19 to February 23, 2018

 

by David Abuaf, CFA

Investment Manager, RJFS

 

 

General Markets / Economic

                                                                                                           

1.     Startups are experimenting with “shared equity” which lets them take an ownership position along with a homeowner

2.     Mining companies are poised for a turnaround fueled by the global economy’s appetite for raw materials and the electric vehicle market

3.     Toy companies are scrambling to produce products tied to social media driven trends

4.     Treasury yields are nearing 3% for the first time in years, a development with significant implications for financial markets

 

 

Company News

 

1.     Facebook is contending with a new wave of criticism prompted by the US indictment detailing how Russia manipulated social-media platforms

2.     Albertsons plans to buy the rest of Rite Aid, as retailers respond to the threat of Amazon

3.     Qualcomm raised its bid for NXP to $44B, a move that could cause Broadcom to abandon its pursuit of Qualcomm

 

 

 

Commentary for the Week of

February 19 to February 23, 2018

 

by David Abuaf, CFA

Investment Manager, RJFS

 

This is exactly why knee jerk reactions are never a good thing. Remember a few weeks back when the “world” was “falling apart,” and everyone – maybe yourself included – thought equities were a terrible place to put your money? In the past few weeks the market (S&P 500) has recouped more than half of its loss!

 

Since the end of the Great Recession, many observers have been looking for factors that could trigger an end to the equity bull market. The latest concern has been a rise in bond yields and a corresponding increase in inflation. What we’ve seen over the past week has been:

1.     Bond yields are likely continuing to rise as interest rates are feeling upward pressure from accelerating US and global economic growth, rising inflation expectations, and tightening Fed policy.

2.     Inflation is also likely to continue rising. The unusual late economic cycle fiscal stimulus should increase the odds that inflation accelerates this year and next.

3.     Economic acceleration is underway with the manufacturing, service and composite Purchasing Managers Indexes all increasing more than expected in February

4.     Improving productivity measures could be the key to continuing an already-long expansion as stronger productivity would likely mean higher real and nominal gross domestic product growth and improved standards of living

 

 

 

All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services. All opinions are as of this date and are subject to change without notice. Raymond James is not affiliated with a and does not endorse the services or opinions of any of the quoted professionals or their respective firms/ publications.

 

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 Purchasing Managers' Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.  Keep in mind that individuals cannot invest directly in any index. Individual investor's results will vary. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

 

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