Telemus Weekly Market Review

May 8 – 12, 2017

After posting gains for four weeks in a row, the S&P 500 suffered a slight setback this week, ticking lower by 0.35%. The Dow fell as well dropping 0.53% for the week. However, the Nasdaq enjoyed a small victory, adding 0.34%, as it continued to ride the relative strength of Apple, Amazon.com, and this week NVIDIA.

The S&P 500 was flat through the first three sessions of the week with a slim loss on Tuesday wiping out small victories on Monday and Wednesday. The range-bound performances followed Sunday’s French presidential election in which centrist candidate Emmanuel Macron handily defeated far-right candidate Marine Le Pen, as expected. Mr. Macron’s victory was seen as a positive for global equity markets as it takes the possibility of France leaving the European Union off the table for the foreseeable future.

With a key risk event averted, the CBOE Volatility Index retreated to a historically-low level. The VIX, also known as the “investor fear gauge”, settled Monday at its lowest mark since December 1993 and finished both Tuesday and Wednesday below 10. Prior to this week, the VIX had only settled below the 10 mark nine times.

Crude oil became a focal point on Wednesday after the Energy Information Administration reported the largest weekly decline in U.S. crude stocks so far this year. The bullish reading prompted a two-day rally for the commodity. Also of note, President Trump unexpectedly fired FBI Director James Comey on Wednesday. That move triggered a tidal wave of political opinions and raised some concerns about the path of progress for the Trump Administration’s pro-growth plans that stymied the stock market. Overall, though, it did not cause any major selling in the stock market.

Retailers captured investors’ attention on Thursday when Macy’s plunged 17.0% in reaction to its disappointing earnings report. Kohl’s, Nordstrom, and J.C. Penney also slipped after delivering their quarterly results, leaving the SPDR S&P Retail ETF lower by 2.9% for the week. Disappointing Retail Sales for April didn’t help matters, but some of the sting of that headline was taken out by an upward revision for March to 0.1% from -0.3%.
April CPI came in roughly as expected on Friday with total CPI rising 0.2% and core CPI, which excludes food and energy, adding 0.1%. On a year-over-year basis, total CPI is up 2.2% and core CPI has increased 1.9%. Following the data, Chicago Fed President Evans said that he expects one or two additional rate hikes this year with the actual number depending on the level of inflation.

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 78.5%, down from last week’s 83.1%. In the Treasury market, increased buying interest in the second half of the of week left the benchmark 10-yr yield at 2.33%, which is two basis points below last Friday’s closing level.

The S&P 500 posted modest losses on Thursday and Friday, which is what ultimately tipped the week in the bears’ favor. Crude oil closed Friday at $47.82 a gain of $1.35 for the week on the back of the surprise drawdown in U.S. crude inventories.

May 15 – 19 Economic Calendar

  • Monday
  • Empire State Mfg Survey
    8:30 AM ET
  • Housing Market Index
    10:00 AM ET
  • Treasury International Capital
    4:00 PM ET
  • E-Commerce Retail Sales
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Loretta Mester Speaks
    1:15 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Housing Starts
    8:30 AM ET

  • Redbook
    8:55 AM ET
  • Industrial Production
    9:15 AM ET
  • E-Commerce Retail Sales
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Loretta Mester Speaks
    1:15 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • E-Commerce Retail Sales
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Loretta Mester Speaks
    1:15 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
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Loretta Mester Speaks
    1:15 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • James Bullard Speaks
    9:15 AM ET

  • Baker-Hughes Rig Count
    1:00 PM E
  • Treasury International Capital
    4:00 PM ET
  • E-Commerce Retail Sales
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Loretta Mester Speaks
    1:15 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.