News for the Week of April 17 – April 21, 2017
by David Abuaf, CFA
Investment Manager, RJFS
Government / Political / non-Economic
- Russian bombers were busy “buzzing” the Alaskan shoreline last week
- The Navy confirmed that it didn’t send an aircraft carrier directly toward North Korea, despite representations by the WH that it was on its way. Doesn’t the Navy report to the President? How was there a miscommunication!?
- Fun trivia fact. The average aircraft carrier is only refilled with fuel ONCE in its entire lifespan!!
- Trump called for distributing more high-skilled worker visas to the highest paid applicants, a move likely to benefit tech firms
- Turkey’s vote on presidential powers contravened the law by changing ballot-counting rules, international observers said
- Clashes across Venezuela turned deadly as protesters sought to force Maduro to hold elections
General Markets / Economic
- Treasury yields resumed their steep decline as political uncertainty drove investors to buy bonds
- US housing starts fell in March, but not enough to signal a reversal from a long-term upswing
- Higher growth returned to China in the first quarter, with GDP expanding by 6.9% from the year earlier period
- Exxon applied for a waiver from sanctions on Russia as it seeks to resume its joint venture with state oil giant Rosneft
- As expected, American Express reported lower earnings and revenue, hurt by the loss of its relationship with Costco
- Google plans to introduce an ad-blocking feature in the mobile and desktop versions of its Chrome web browser
- The US Air Force is dismissing a family’s claim that low-flying fighter jets scared a pet pony to death in the United Kingdom. The case has been referred to the UK Defense Ministry Office
- A couple from Lakeland, Florida have just set the record for the most cruises with Carnival Cruise Lines – at 200! Talk about brand loyalty. Now here was my question…will Carnival give them a free cruise, an upgraded suite? Nay! Instead, they got….wait for it, because it truly is ridiculous, bad ridiculous….a personal letter and photo opportunities with the crew. Talk about “loving your customers”
- Casinos in Las Vegas are now being more judgmental on whether to offer a player a free alcoholic beverage or not. I mean, first it was watered down liquor, now I have to wait until they think I’ve spent enough money to booze up!? Might as well not even gamble now!
Commentary for the Week of April 17 – April 21, 2017
by David Abuaf, CFA
Investment Manager, RJFS
The stock market put its recent woes behind it and broke a two-week losing streak. However, that alone was enough to cause worry as some of the market’s strength was driven by a small number of tech stocks, rekindling memories of the internet bubble. While it’s true that the 10 largest stocks in the S&P 500 accounted for 39% of the market’s gains during the first quarter of the year, according to Birinyi Associates data, it doesn’t’ have to be bad news for the overall market. Birinyi’s Laszlo Birinyi notes that there have been plenty of big gains that have been buoyed with a small number of stocks, including 1980, 1998, and 1999, when the S&P 500 posted gains of more than 19% despite the top 10 stocks being responsible for at least 40% of the move. He says, “our view is that it is another statistic that has no investment implication.”
The truth is more complex. Frank Gretz of Wellington Shields notes that only 25% of the stocks in the S&P 500 are above their 10-day moving average, suggesting a good portion of the market is suffering a short-term correction, perhaps explaining the queasy feeling so many investors have right now.
All this isn’t to say that there aren’t worries. In Washington, Treasury Secretary Steve Mnuchin talked up tax reform, which the market would love to see, but President Trump also rebooted his nationalist agenda, including the possibility of more tariffs on steel. That would be great news for US steel makers, but not so great for the rest of the market.
Internationally, the markets continue to monitor the French election. Morgan Stanley’s Michael Wilson says a win by hard right candidate Jean-Luc Melenchon could cause a sizable drop in the market, while a victory by mainstream candidate Emmanuel Macron could bring a jump. Whatever happens, getting past the election will allow investors to focus on fundamentals. “we think this is the last major risk event before the summer, after which we can have the next move higher.”
All opinions presented are those of David Abuaf, and not of Raymond James or Forman Investment Services.
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 S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Commodities’ investing is generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index. Individual investor's results will vary. Past performance does not guarantee future results.
To opt out of receiving future emails from us, please reply to this email with the word “Unsubscribe” in the subject line.