Telemus Weekly Market Review

August 21 – August 25, 2017

No news proved to be good news for the bulls this week, giving them an opportunity to reclaim control of the U.S. equity market, which rode a two-week slide into last Monday’s session. For the week the Dow gained 0.64%, the S&P 500 gained 0.72% and the Nasdaq finished slightly above its peers with a gain of 0.82%.

Ten sectors settled the week in the green – real estate, telecom services, materials, health care, technology, utilities, energy, financials, consumer discretionary, and industrials – while one group finished in the red – consumer staples.

The week’s most notable headlines in chronological order:

  • Monday – U.S. and South Korea forces begin their annual military exercise; North Korea says the exercise will only add fuel to the fire.
  • Tuesday – Politico reports that White House and Congressional leaders have worked together to make significant strides in framing a tax-reform proposal.
  • Wednesday – President Trump threatens a government shutdown if his promised barrier along the U.S.-Mexico border doesn’t secure funding. This event happened on Tuesday night, but the market reacted on Wednesday.
  • Thursday – Grocers take a beating following news that Amazon’s (AMZN) acquisition of Whole Foods Market (WFM) will close on August 28
  • Friday – Fed Chair Janet Yellen says any changes to financial regulations should be modest and she is open to reviewing the Volcker Rule. ECB President Mario Draghi speaks in favor of open trade and argues for raising potential output growth

Although not a headline one of the most talked about news items this week was the possibility of a government shutdown. Without going into the political details, the gist for the market is simple; the probability of a government shutdown appears to be higher now than it was a week ago.

A shutdown may stifle economic growth a bit, but the market has traditionally held up pretty well during halts in government spending. To avoid a shutdown, Congress will need to pass a new spending bill, and President Trump will have to sign it, by the end of September.

Following this week’s events, the fed funds futures market now points to the June 2018 FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 58.0%. Last week, the market expected the next rate hike to occur in March 2018 with an implied probability of 51.5%. The 10 year U.S. Treasury note closed at 2.17% down about 3 basis points from last weeks close.

Crude oil ended the week at $47.86 down about $1 from last Fridays close despite the threat of Hurricane Harvey hitting Texas. Of note last week the U.S. dollar slid to its lowest level since January 2015 versus the Euro.

August 28 – September 1 Economic Calendar

  • Monday
  • International Trade in Goods
    8:30 AM ET
  • Dallas Fed Mfg Survey
    10:30 AM ET
  • Consumer Confidence
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Jerome Powell Speaks
    9:15 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Farm Prices
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Redbook
    8:55 AM ET

  • S&P Corelogic Case-Shiller HPI
    9:00 AM ET
  • Consumer Confidence
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Jerome Powell Speaks
    9:15 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Farm Prices
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • ADP Employment Report
    8:15 AM ET
  • GDP
    8:30 AM ET
  • Corporate Profits
    8:30 AM ET
  • Jerome Powell Speaks
    9:15 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Farm Prices
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Challenger Job-Cut Report
    7:30 AM ET

  • Jobless Claims
    8:30 AM ET
  • Personal Income and Outlays
    8:30 AM ET
  • Chicago PMI
    9:45 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Pending Home Sales Index
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Employment Situation
    8:30 AM ET

  • PMI Manufacturing Index
    9:45 AM ET
  • ISM Mfg Index
    10:00 AM ET
  • Construction Spending
    10:00 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Farm Prices
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This market commentary is a matter of opinion and is for informational purposes only.  It is not intended as investment advice and does not address or account for individual investor circumstances.  Investment decisions should always be made based on the client’s specific financial needs, goals and objectives, time horizon and risk tolerance.  The statements contained herein are based solely upon the opinions of Telemus Capital, LLC.  All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.