Archive for ND&S Updates
Weekly Commentary (4/17/17) – Geopolitical Tensions are Back
April 17, 2017
Stocks lost ground last week as geopolitical tensions rattled investors’ nerves. Ongoing tensions between the United States and Russia along with escalating tensions between the United States and North Korea pushed stocks lower and bonds higher.
For the week, the DJIA finished lower by 0.98% while the S&P 500 fell by 1.11%. Developed international markets were also off, but by much less than U.S. markets as the DJ Global ex-US index gave back 0.12%. Fixed income, represented by the Bloomberg/Barclays Aggregate, finished the week ahead by 0.76%. As a result, the 10 YR US Treasury closed at a yield of 2.237% (down 11 bps from the previous week’s closing yield of 2.343%). Gold jumped $31.60 to close at $1,285.90/oz. Oil prices ticked higher (up $0.94) on the week to close at $53.18/bbl.
In economic news released last week, the Labor Department reported that import prices fell 0.2% in March … further reinforcing moderate inflation expectations and keeping bond yields lower. Earnings season kicked-off last week with JP Morgan and Citigroup reporting better-than-expected earnings.
Expect to see a slew of blue chip companies reporting earnings this week. Among the companies reporting are Johnson & Johnson, General Electric, Morgan Stanley and United Health Care. Economic releases this week include Empire Manufacturing, Industrial Production, Initial Jobless Claims and March Leading Index.
As always, we plan to look through the day-to-day news and focus on longer-term objectives.
Let’s make it a good week!
“Always do your best. What you plant now, you will harvest later.” – Og Mandino
Shots Fired
April 10, 2017
Equity markets saw lots of volatility but ended mostly flat last week, with geopolitical developments being the prime driver. The week kicked off on Monday with President Trump saying he is ready to act alone on North Korea if China does not change the current situation … the comments came days before a scheduled meeting with Chinese President Xi Jinping. Wednesday produced a roundtrip by the markets, morning optimism prompted by the ADP employment report was offset by the afternoon release of the Fed minutes (“stocks are quite high”) combined with Paul Ryan’s comments that tax cuts would take even longer than health care insurance reform. On Friday, responding to a chemical attack in Syria on rebel forces and civilians, the US conducted an overnight strike against the Shayrat airbase and the Assad regime. Although the strike was condemned by Russian and Iran (allies of Syria President Bashar al-Assad), it garnered bi-partisan support domestically and around the globe.
For the week, the DJIA closed at 20656 for a slight gain of 0.02%. The broader-based S&P500 closed lower by 0.24. Smaller US companies measured by the Russell 2000 finished the week down by 1.52%. International equities were mixed with the MSCI EAFE closing lower by 0.65 and emerging markets closing higher by 0.38%. Yields were flat for the week as the 10yr US Treasury closed the week at 2.38. As expected, gold and commodities caught a bid and finished the week higher due to the uncertain geopolitics around the world.
If last week is any indication, any unexpected political event will not currently cause investor panic. This holiday shortened week is light on market moving news with only reports on retail sales and consumer price data set for Friday. It appears that investors have their eyes on the impending earnings season which a number of banks set to report this week.
“I never had a policy; I have just tried to do my very best each and every day.” – Abraham Lincoln
Market Recap 4/3/2017
April 3, 2017
The DJIA closed the week higher by 0.32% while the broader-based S&P 500 finished up 0.82%. Representing smaller US companies, the Russell 2000 was the best performer last week as it closed higher by 2.37%. International markets finished flat to down as the MSCI EAFE finished up 0.06% and the MSCI EM finished the week down 1.05%. Yields across the board closed the week right about where they started as the 10 Yr. Treasury closed at a yield of 2.4%. Last week’s rebound closed a positive first quarter for risk assets with all major equity assets in the green … S&P 500 +6.07%, Russell 2000 +2.47%, MSCI EAFE +7.25%, MSCI EM +11.45%.
Economic data released last week were fairly positive – Consumer Confidence came in at 125.6 as it continued its upward trend since the election and marked the highest level since December 2000; Home prices increased 5.7% y/y beating estimates; The Commerce Department released their 3rd and final estimate of fourth-quarter GDP, which came in at 2.1%. On the geopolitical front, the United Kingdom formally began the process of withdrawing its European Union membership by triggering Article 50 of the Lisbon Treaty. The news was expected, and they will now enter into a two-year negotiation on a formal divorce from the European Union.
Economic data this week will include a report on Global manufacturing PMIs, minutes from the March FOMC meeting and the March employment report. Now that the calendar has flipped to April, investors will be looking to earnings season which begins to unfold over the next few weeks.
Enjoy the Spring!
“Here cometh April again, and as far as I can see the world hath more fools in it than ever.” – Charles Lamb
Earnings Reports Continue
April 24, 2017
Last week, equity markets rallied with the DJIA, S&P 500 and the NASDAQ advancing 0.51%, 0.87% and 1.82% respectively. Small caps were the best performers for the week as measured by the Russell 2000 index which was up 2.58%. The best performing stock sectors were industrials, consumer discretionary and technology. Growth stocks continue to outperform value stocks. International equities were also positive with the MSCI EAFE up 0.23% and the MSCI EM up 0.17%.
This week the flood of earnings reports continues but the big news over the weekend was the results of the voting in France. The centrist candidate Emmanuel Macron bested populist candidate Marine Le Pen in the 14 person initial round of voting. This is calming fears about the possibility of France leaving the EU. On Friday, we will get the 1st quarter advanced estimate for GDP which is expected to come in at around 1% which would be substantially below estimates for 2.1% at the beginning of the year.
Source: www.kantar.com
So far this year, “soft data” on the economy such as consumer and business confidence has been strong, but “hard data” like car sales, consumer spending and production have not matched expectations. Hopefully economic numbers will start to match expectations otherwise company earnings may be impacted.
“Success is where preparation and opportunity meet.” – Bobby Unser