The first week of earnings did little to change the overall market’s trend. In fact, it may have provided reasons to reinforce it. While the week's reports were mostly beats at the top and bottom lines (just like three months ago), the reception to some of the more cyclical company earnings reports (Banks and Industrials) were very unwelcoming.
Some good data below so I won’t draw out this intro. Stay focused overseas. Keep an eye on earnings which will hopefully be better than the reception that the big banks received on Friday. (But don’t worry, the bank disappointments were interest margin and loan growth caused, not credit related.)
It never fails that when you decide to slip out of the office for a break, the markets will act up. Last week was not an exception to the rule as investor anxiousness continued to cause activity on trading desks. Rising global yields continued to stress risk parity funds and leveraged hedge funds who were positioned for lower interest rates.
The recently-ended second quarter of 2017 needed a bit more sugar from technology-driven Nasdaq to make it perfect for investors. While it was a nearly solid quarter all around for equity and risk-seeking investors, the June pickup in Nasdaq volatility left some with a sour taste in their mouth.
If you are not already on break, then you are thinking about busting out soon to take some days off before the Q2 earnings season hits in three weeks. This is the last week of June and the second quarter so expect some window dressing into the July 4th holiday weekend.
The last two weeks of June are usually a good time to recharge the batteries and get away. Unfortunately, last week kept many of those out of the office attached to their smartphones and their boats tied up at the docks.
You would have thought the world of technology stocks had entered a recession after reading the weekend press and blogs.
The financial markets continued to absorb major news events with surprising ease last week. Be it the tragedies in the U.K., the withdrawal from the Paris climate agreement, or the weakness in Friday's employment data, the stock and bond markets both continued to edge higher. Investors seem to have become conditioned toward individual isolated disappointments all while the bigger picture is toward one of global economic growth and relative stability.
The international markets have lower valuations, improving growth and possibly even more political certainty than here in the U.S. Foreign currencies are rising against the U.S. dollar as economic trade flows shift and investors want to diversify away from the United States. It is getting increasingly more difficult to make business and investment decisions with Washington D.C. policy proposals and reactions being so fluid. CEOs are confused, foreign leaders are confused and even I am confused whether buying an American made car without the Ford or GM logo on it is still a pro-American purchase.
Expectations for U.S. growth continue to slow as distractions in Washington D.C. take away from the aggressive legislative agenda.
No one said that the flight path to higher returns would be easy. With the increase in uncorrelated asset returns, there are many different sets of positive returns out in the market right now. You just need to set the right flight path to snatch some of those better return streams.
As the VIX flirts with single digits, the S&P 500 has been flopping around like a live fish on deck. But for U.S. investors in foreign equities, the music continues to play as cheaper valuations overseas and a weaker U.S. dollar pushed fund flows into other geographies.
While there was plenty of ink spilled and electrons fired regarding the White House tax reform proposal last week, it could be a very long time before anything actually gets voted on. And who knows if it will even be passed.
The French President semi-finals were over the weekend and the vote went about as positive as they could have for the markets. While LePen won the first round, it is unlikely that she will be able to gather enough support to upset Macron in the final tour.
While the world's superpowers reposition their military strength toward the borders of North Korea, the financial markets look to be following closely in their wake and reordering their asset weighting toward one of less risk.
If you thought surprise air strikes in Syria, a "nuclear option" in the U.S. Senate, and Fed talk of shrinking the U.S. balance sheet in 2017 would be enough to get a 1% move in the market, then you were wrong.
While the equity markets finished with a strong quarterly gain, it was the underlying rotation which left your portfolio spinning. The markets returned to their pre-election tone as growth stocks were bought and value stocks were sold. This trend is likely to continue until the market gains some certainty on future tax reform and infrastructure spend.
I know that I am not the only one feeling it. You can see the increasing risk in the markets and uglier action on the tape. Credit is seeing selling even as recession fears are distant. Bank stocks are rolling over even with the Fed raising interest rates.
How is your bracket doing? Before the ACA Repeal and Replace plan hit the court last week, it already looked like its odds of passage were longer than Mount St. Mary's chance to win the Men's NCAA Basketball Tournament on April 3rd.
It should have been the best week of the Presidency for New York’s favorite son. After staying on script at his address to a joint session of Congress, you could sense that the narrative was shifting from “he is trying to do too much” to “how great it would be if he can get just one half of his agenda done.”
While the majority of the financial world has its focus on every move in Washington D.C., there is another very important development happening in the German bond market.
While politics and the new government's agenda is still very much in the news, investor interest last week shifted to the bigger picture.
Market psychology was tested last week. Early in the week, the nightly news flow out of Washington D.C. was so concerning, that it felt as if the markets could have easily opened limit down the next morning.
You knew the protectionist measures would come. You just didn’t know how soon they would be implemented and how disruptive they could be. A border trade war with Mexico could mean some very expensive items in the produce aisles offset by a glut of beef, pigs and cheese in the U.S.
Crowd sizes, Alternative Facts, The Bee Movie, Madonna, Tax Returns, Twitter, Facebook, 24-hour news channels and Saturday Night Live. If you enjoy political entertainment, then now is your time.
Time for the new White House and Congress to put pen to paper. While the equity markets have sustained their high levels, intra-day volatility in currencies, bonds and equities have surged as those markets attempt to react to every rumor and tweet out of Washington and Trump Tower.
2016 was a rather boring year for the markets. That is until the surprising November election results left Americans thinking “Now What?”
It was a big first week of 2017 for the weather and for the U.S. markets. As temps dropped and snow hit nearly every state in the union, stocks only wanted to move into the clouds. The numbers showed that it was a different type of week with growth, biotech and FANG stocks leading the week one charge.
So much for the Santa Claus rally. The red sled never even left the garage. Why were the last two weeks of 2016 a dud?
As we head into the final stretch of 2016, the U.S. dollar has taken control of the markets. As the incoming Trump administration continues to promise fiscal spending and tax cuts, the Fed is now positioning to do a bit more tightening—all while the U.S. and global economic datapoints move higher.
Well that was unexpected. I don't think anyone had Hillary Clinton winning Minnesota by ONLY 1.4%, much less the GOP sweeping two branches of the U.S. Government and looking to line up the third branch (i.e., Supreme Court). So now what? What I wrote on Sunday still holds true today: "the markets like nothing more than certainty."
