Telemus Weekly Market Review

June 5 – June 9, 2017

The stock market successfully hurdled several key macro events, including the testimony of James Comey, the latest policy decision from the European Central Bank, and the UK general election, only to get tripped up by tech stocks on Friday. The major averages settled the week mixed with the Dow adding 0.31% while the S&P 500 and the Nasdaq lost 0.30% and 1.55%, respectively.

Following back-to-back losses for the S&P 500 on Monday and Tuesday, financials led the benchmark index to its first win of the week on Wednesday, even in the face of a bearish inventory report from the Energy Information Administration. Crude oil plunged nearly 5% after the EIA showed a build in both crude and gasoline inventories for the prior week.

However, prepared remarks from former FBI Director James Comey, which were released to the public ahead of Thursday’s testimony, were the focal point of Wednesday’s session. The initial response to the statement was positive as market participants were seemingly heartened by the understanding that there wasn’t any overt obstruction of justice claim against President Trump.

On Thursday, the Senate Intelligence Committee directly asked Mr. Comey if he thought Mr. Trump was trying to obstruct justice during their meeting on February 14 when he told Mr. Comey that he hoped the FBI could let go of the investigation of former National Security Adviser Michael Flynn. Mr. Comey responded that it wasn’t for him to say and he would let others make that determination.

Investors breathed a sigh of relief, not only in reaction to Mr. Comey’s testimony, but also in reaction to the ECB’s decision to leave interest rates unchanged, as expected. With two of the week’s three major events in the rearview mirror, the financial sector led the S&P 500 to its second victory of the week. However, gains were held in check as investors awaited the results of the general election in the UK.

Sure enough, the Brits threw the world for a loop, yet again, as Prime Minister Theresa May’s Conservative Party lost its parliamentary majority. The pound dropped noticeably following the results while European markets took the news in stride. Meanwhile, U.S. indices ended the week lower as high-flying, mega-cap names like Apple, Microsoft, Amazon, Alphabet, and Facebook , and semiconductor stocks, like NVIDIA and Broadcom, came under some notable profit-taking pressure.

The top-weighted technology sector, which houses six of the seven aforementioned companies, plunged 2.7% on Friday led by the so called FANG stocks. However, the financials and energy sectors, which have been underperforming all year, helped keep the tech group’s bearish influence in check, adding big gains of 1.9% and 2.5%, respectively, in what had the appearance of a sector rotation trade.

The fed funds futures market still points to the June FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 95.8%, unchanged from last week. The U.S. central bank will kick off its two-day meeting on Tuesday with the rate-hike decision crossing the wires on Wednesday afternoon. The 10 year U.S. Treasury note closed Friday at 2.20% after falling to as low as 2.14% earlier in the week.

Crude oil finished the week at $45.90 a drop of roughly 4% for the week on continued concern over growing U.S. shale production.

June 12 – June 16 Economic Calendar

  • Monday
  • Treasury Budget
    2:00 PM ET
  • NFIB Small Business Optimism Index
    6:00 AM ET

  • PPI-FD
    8:30 AM ET

  • Redbook
    8:55 AM ET

  • Willian Dudley Speaks
    1:45 PM ET
  • FOMC Meeting Announcement
    2:00 PM ET
  • FOMC Forecasts
    2:00 PM ET
  • Fed Chair Press Conference
    2:30 PM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • FOMC Meeting Begins

  • NFIB Small Business Optimism Index
    6:00 AM ET

  • PPI-FD
    8:30 AM ET

  • Redbook
    8:55 AM ET

  • Willian Dudley Speaks
    1:45 PM ET
  • FOMC Meeting Announcement
    2:00 PM ET
  • FOMC Forecasts
    2:00 PM ET
  • Fed Chair Press Conference
    2:30 PM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Consumer Price Index
    8:30 AM ET
  • Retail Sales
    8:30 AM ET
  • Business Inventories
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • FOMC Meeting Announcement
    2:00 PM ET
  • FOMC Forecasts
    2:00 PM ET
  • Fed Chair Press Conference
    2:30 PM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • Philadelphia Fed Business Outlook Survey
    8:30 AM ET

  • Empire State Mfg Survey
    8:30 AM ET
  • Import and Export Prices
    8:30 AM ET
  • Industrial Production
    9:15 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Housing Market Index
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Housing Starts
    8:30 AM ET

  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Robert Kaplan Speaks
    12:45 PM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • FOMC Meeting Announcement
    2:00 PM ET
  • FOMC Forecasts
    2:00 PM ET
  • Fed Chair Press Conference
    2:30 PM ET
  • Treasury International Capital
    4:00 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.