Telemus Weekly Market Review

November 27 – December 1, 2017

U.S. equities advanced this week, fueled primarily by the prospect of a tax overhaul. The Dow led the charge, moving higher by 2.86%, followed from a distance by the S&P 500, which added 1.53% for the week. Meanwhile, the tech-heavy Nasdaq declined 0.60% as technology stocks fell on some profit taking following a big year-to-date run.

Investors kept an eye on Washington throughout the week, awaiting the Senate’s vote on its version of a tax reform bill. Things appeared to be progressing nicely as the bill made it’s way through the Senate Budget Committee on Tuesday and Senator John McCain voiced his support for the measure on Thursday.

However, the effort hit a bump in the road on Thursday evening when the Senate parliamentarian ruled that a revenue trigger within the bill–which would have raised taxes in the future if economic growth failed to make up for lost tax revenue–is not allowed under Senate rules. The trigger was a key provision for several GOP Senators who are concerned about the tax overhaul’s potential impact on the national debt.

Senate Majority Leader Mitch McConnell suggested on Friday afternoon that a compromise to appease the aforementioned debt concerns had been reached, saying that the GOP has enough votes to pass the bill. The Senate early Saturday passed a sweeping tax-code overhaul almost entirely along party lines, advancing a top policy goal of congressional Republicans and President Donald Trump.

The Senate’s promising progress on tax reform largely fueled this week’s rally, but equities also received support from Jerome Powell’s Fed Chair confirmation hearing, which took place on Tuesday. Mr. Powell’s comments were largely in line with the Fed’s current policy rhetoric, but he did sound a little more lax in the area of regulation.

There were a few developments that worked against the bulls this week, the most notable of which was former National Security Advisor Michael Flynn’s plea deal with Special Counsel Robert Mueller’s team–which is investigating Russia’s alleged interference in the 2016 U.S. presidential election. Mr. Flynn pleaded guilty to lying to the FBI about his contacts with a Russian ambassador to the United States and agreed to cooperate with Mr. Mueller’s investigation. An ABC report indicated that Mr. Flynn is willing to answer questions about President Donald Trump, which reignited fears about a potential impeachment.

Also, North Korea launched a ballistic missile on Tuesday that landed in the Sea of Japan–specifically in Japan’s exclusive economic zone.

Nine of eleven sectors finished the week in positive territory. The top-performing sectors groups were telecom services, financials, industrials, and energy, while the weakest sectors were information technology and real estate. The energy sector rallied after OPEC and non-OPEC nations, including Russia, agreed on Thursday to extend their production cut agreement by another nine months, as expected. Meanwhile, West Texas Intermediate crude futures finished in the red for just the second time in eight weeks, dropping 1.0% to $58.36 per barrel.

Following this week’s events, the CME FedWatch Tool still places the chances of a December rate hike at 100.0%. The 10 year U.S. Treasury note ended roughly unchanged at 2.36%.

December 4 – December 8 Economic Calendar

  • Monday
  • Factory Orders
    10:00 AM ET
  • TD Ameritrade IMX
    12:30 PM ET
  • PMI Services Index
    9:45 AM ET
  • ISM Non-Mfg Index
    10:00 AM ET
  • Quarterly Services Survey
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Consumer Credit
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • International Trade
    8:30 AM ET

  • Redbook
    8:55 AM ET
  • PMI Services Index
    9:45 AM ET
  • ISM Non-Mfg Index
    10:00 AM ET
  • Quarterly Services Survey
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Consumer Credit
    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
  • Productivity and Costs
    8:30 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Quarterly Services Survey
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Consumer Credit
    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
  • William Dudley Speaks
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Quarterly Services Survey
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Consumer Credit
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Employment Situation
    8:30 AM ET

  • Consumer Sentiment
    10:00 AM ET
  • Wholesale Trade
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Quarterly Services Survey
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Consumer Credit
    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.