News for the Week of April 10 – April 13, 2017
by David Abuaf, CFA
Investment Manager, RJFS
Government / Political / non-Economic
• Russia has been trying to cover up for the suspected Syrian chemical attack last week, senior WH officials said, adding that the US has concluded sarin gas was used in the assault
• Sean Spicer issued an apology after saying that Assad committed atrocities worse than Hitler’s
• The administration held out the prospect of wider retaliation against Syria and signaled a new push to remove the country’s divisive leader, as Rex Tillerson prepared to head to Moscow
• Alabama Governor Bentley resigned as a scandal stemming from an alleged extramarital affair mushroomed into a crisis that left him facing possible impeachment
• Trump has signed off on a policy approach to North Korea that involves increased economic and political pressure, while military options remain under consideration longer term
• Jeff Sessions directed federal prosecutors to pursue harsher charges against undocumented immigrants who commit crimes
• Twin blasts claimed by Islamic State struck Egyptian churches, killing at least 47, as anti-Christian terrorism escalated
• Stupid politics. Russia vetoed a UN Security Council resolution condemning the latest chemical attacks in Syria.
• There was a larger point to Trump’s notion that the UN is pointless, this would be a great example. Who cares if the UN condemns it, how about a bunch of countries just condemn it!?
General Markets / Economic
• Saudi Arabia has told OPEC officials that it wants to extend the group’s agreement to cut output
• Top global economic and finance institutions defended the role of The World Trade Organization (WTO), countering a Trump administration challenge
• Chinese banks are lending record volumes abroad as Beijing pushes to build infrastructure world-wide
• Trump says he has offered Xi more favorable trade terms for China in exchange for help on confronting the threat of North Korea
• Trump voiced strong support for NATO amid tensions with Russia, declaring he no longer views the alliance as “obsolete”
• Rising house prices are putting the largest metropolitan areas out of reach for slices of the US workforce
• Five KPMG partners were fired after the firm improperly obtained information about which audits its regulator planned to inspect
• Toshiba expressed doubt that it can survive in light of huge losses at its US nuclear subsidiary
• United’s CEO apologized for the forcible removal of a passenger from a flight in Chicago, seeking belatedly to quell a world-wide furor over the incident
• I get it, a bad thing happened, but honestly read your passenger bill of rights. You don’t have “ownership” of the seat you are in until the flight is airborne. It stinks that he got kicked off, wrong that he got injured, but he never had a “right” to that seat!
• All those on board were promised a reimbursement from United
• Barclay’s CEO is under investigation by UK and US regulators after he tried to unmask a whistleblower who criticized his hiring of a longtime associate
• Foxconn has offered as much as $27B to acquire Toshiba’s computer-chip business
• Swift and Knight are merging in a stock swap that combines two of the nation’s biggest trucking companies
• A judge in Manie is refusing to spare the life of a dog named Dakota, despite her being pardoned by the Governor last month. The bite-happy husky was declared dangerous for biting a smaller dog in February – the second attack in a single year.
• I don’t get any of this surprise. They are ANIMALS. They can NOT be told what to do. Be cautious when you approach them. If they bite, it’s MOST LIKELY your fault, there are some things an owner can do to cause such poor behavior in animals, how about we blame the owners as well!?
• While I typically steer clear of any sex talk here, this was rather funny. The owner of the infamous Bunny Ranch brothel near Carson City has announced plans to open a Raiders-themed bordello to cater to sports fanatics near Sin City. Proposed name is “Pirate’s Booty Sports Brothel”
• I ask this sincerely, are there really that many men and women looking to get naughty and simultaneously think about sports?
• Ugly people! Ugh, I just want to kill them. A 22-year-old Indian bride is behind bars after she brutally murdered her husband because he wasn’t handsome. The woman, who was only married for about a week, apparently grew so horrified by her husband’s looks during an argument that she smashed his head in with a stone at their home in Cuddalore, Tamil Nadu.
• The funniest part, if there is one, is that the woman tried to frame her crime as murder by running out of her house crying, saying someone had killed her husband.
Commentary for the Week of April 10 – April 13, 2017
by David Abuaf, CFA
Investment Manager, RJFS
Stocks fell across the board last week in quiet trading, with many market participants out for religious observances. Worries about the war in Syria, North Korean saber-rattling, and the coming French elections had investors reining in riskier positions and heading for safe havens.
With the S&P 500 falling 1.1% on the week, Steve Sosnick at Timber Hill trading notes that much of the damage came in the afternoon Thursday, as traders squared positions ahead of the three-day weekend. “Some people didn’t want to hold positions ahead of a long weekend” given geopolitical concerns. Giri Cherukui at Oakbrook Investments says the rally impetus from the so-called Trump trade seems depleted. “We’re approaching the three month point for the administration and Trump has promised a lot of pro-business policies, though there’s a bit more of a worry over whether those policies will get implemented.”
There is concern on the street that the US economy isn’t expanding as strongly as hoped. The recent unexpected rally in Treasury bonds has stock-market watchers worried growth is slowing. This creates a cautious backdrop ahead of what is supposed to be a good first quarter earnings season, which begins in earnest this week.
Market strategist at Jones Trading, Yousef Abbasi says “we’re expecting about 9% first quarter earnings growth, but the market is in a ‘show me’ state; earnings have to come through.” Michael Mullaney, of Boston Partners, concurs and adds that the back half of April could offer plenty of geopolitical events that might roil investors. He notes that French elections begin April 23; markets fear a victory by nationalist candidate Marine Le Pen. April 28 offers a potential double-whammy: the release of US GDP for the first quarter and the expiration of Congress’ continuing-resolution budget bill. If there is no agreement on the measure by then, the government could shut down the next day.
All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services.
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