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.