News for the Week of April 23-27

General Markets / Economic

  1. Electric vehicle start-ups are luring seasoned auto executives to help them make sense of the capital-intensive business

  2. Sales of previously owned homes ticked up in March from February, but were below year- earlier levels

  3. He highest oil prices in years are boosting costs and denting earnings at some firms, while proving a boon for energy companies

Company News

  1. EU antitrust authorities opened a full blown prove into Apple’s proposed acquisition of Shazam

  2. First quarter earnings are in, and some companies are stating how these earnings are near high water marks – pushed down shares of large companies like Caterpillar and 3M

  3. I don’t usually post about quarterly earnings, but Twitter reported its second straight profit after starting life as a public company with 16 quarterly losses (that’s 4 years!)

Interesting Stories

  1. I hate traffic – I literally killed my car’s horn TWICE – but this is too much. Kinshasa Congo rolled out traffic robots in recent years to try
    to manage some of the world’s most chaotic intersections. These robots are equipped with red and green lights and moveable arms to direct vehicles

  2. The only thing I know about international basketball is how bad the players were – and that’s only because I remember the original Dream Team from 1992. While international basketball players have improved markedly over time, some are trying to limit the competition. Specifically, South Korea’s pro league is now capping the height of foreign players allowed to play.

Commentary for Week of April 23 - April 27, 2018

by David Abuaf

Stocks had a choppy, mixed week; as Asian and European markets saw gains, US markets declined. Worries about trade policy and a potential business cycle peak trumped the strong earning season, and macro-economically the 10-year US Treasury yield breached 3% and raised fears of a rotation out of stocks into bonds; so of course we saw oil and gold prices fall.

What’s a shade troubling, is just how good the US stock market is – as of 4/27, 53% of S&P 500 companies had reported first quarter results with 79% exceeding earnings expectations and 74% beating sales expectations. FactSet estimated that the S&P 500’s quarterly earnings grew at 23.2%, which is the highest rate since Q3 2010. Outside of stocks, the Commerce Department reported that US GDP rose at an annual rate of 2.3% (likely leading to the higher US Treasury yield), coupled with a slight drop in consumer sentiment – though it is still above historical levels.

Elsewhere, last week we saw existing home sales for March tick up along with manufacturing output rising slightly and jobless claims continuing to fall – currently at the lowest reading since early in the Nixon administration. The bad news about that is the fall in unemployment means the economy is near reaching full employment. What that means to us is a probable increase in interest rates and likely a necessary fast rise in rates!