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NDS Weekly Commentary (7.16.18) – The Troll Under the Bridge

Last week, surging shares of technology companies once again sent the NASDAQ to a record high. The index finished 1.79% for the week and is now up 14% year-to-date. Both the S&P500 and the DJIA rose last week 1.55% and 2.32%, respectively.
After the White House announced it would assess 10% tariffs on additional $200 billion of Chinese goods, the market dipped. Shares rallied on strong corporate earnings reports and expectations to close out the week. International equities also were positive with developed markets returning 0.16% and emerging 1.71%.

Firming inflation and low unemployment has supported the Fed’s case for gradually increasing short-term rates to keep inflationary pressures in check. The Fed has lifted rates twice this year and have penciled in two more increases by year’s end. The 10yr US Treasury remained stable at 2.8%.

We are pleased with JP Morgan Chase (JPM) and Citigroup (C) both reporting second quarter earnings that beat analyst estimates. JPM’s profit rose 18% and C’s 16%, which are great results given revenue from interest margins have been in question due to the flattening interest rate yield curve.

We continue to recommend diversifying portfolios, insulating the effects of higher interest rates and capturing profits in overvalued holdings while selectively taking advantage of dividend growth opportunities. So far, decent mid-year results despite rate hikes, tariffs, trade wars, and the price of oil surging 60% over the last 12 months.

“Success is a journey, not a destination. It requires constant effort, vigilance and reevaluation…”Mark Twain

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