Telemus Weekly Market Review

November 6 – November 10, 2017

Stocks got off to a good start this week, hitting new record highs on Monday and Wednesday, but retraced their gains in the latter half of the week a move that was nominally attributed to the release of the Senate’s tax reform bill. More likely, however, this week’s loss was the result of some profit taking following a largely uninterrupted two-month rally. For the week the S&P 500 lost 0.20% and the Nasdaq shed 0.21%, while the Dow lost 0.50%.

The financial sector paced this week’s retreat, which is fitting considering the group played a leadership role in the market’s most recent bullish run; the financial sector jumped 11.4% from September 8 to November 3, while the benchmark S&P 500 added 5.1%. Dow components JPMorgan Chase and Goldman Sachs lost 3.9% and 1.7% this week, respectively.

Industrial shares also struggled, with transports showing particular weakness; the Dow Jones Transportation Average dropped 2.6%.

Meanwhile, the energy sector outperformed, finishing with a gain of 1.1%. The group benefited from an increase in the price of crude oil, which touched its highest level in more than two years; WTI crude futures finished higher by 2.15% for the week closing at $56.90 a barrel on Friday. Heightened tensions in the Middle East, which could potentially disrupt crude production in the region, were largely credited for the move.

Saudi Arabia’s Crown Prince Mohammad bin Salman ordered the arrests of some of the country’s most prominent political and business figures on allegations of corruption. In addition, Saudi Arabia ordered its citizens to leave Lebanon after accusing the country of declaring war, citing the presence of Iranian-backed Hezbollah members within the Lebanon government.

Back in the U.S., earnings season continued this week–albeit with fewer notable companies on the docket–but headlines were focused on M&A developments. Sprint and T-Mobile US lost 7.2% and 3.6%, respectively, after announcing over the weekend that they could not reach a merger agreement.

Meanwhile, chipmaker Broadcom slipped 3.2% after bidding $70 per share (in cash and stock) for Qualcomm, which, conversely, ended the week higher by 4.5%. There were also reports that the Department of Justice would require the sale of CNN before it would approve AT&T’s acquisition of Time Warner, but later reports said that claim was false. Also of note, Walt Disney and 21st Century Fox were reportedly in discussions regarding a sale of assets to Disney from Fox in recent weeks and Hasbro is rumored to be interested in Mattel.

Speaking of chipmakers tech darling Nvidia reported earnings after the close on Thursday that beat estimates. The stock has more than doubled so far this year.

On the political front, the Senate on Thursday released its version of a tax reform bill, which called for delaying a cut in the corporate tax rate to 20% from 35% by one year and differed from the version that the House unveiled last week in several other key areas–including deductions related to state and local property taxes.

The two chambers will have to hammer out those differences in order to put the bill on the president’s desk for approval, and uncertainty surrounding Congress’ ability to do just that were cited by some as the main catalyst for Wall Street’s weakness in the latter half of the week.

Following this week’s events, investors still strongly believe that the Fed will raise rates next month, with the CME FedWatch Tool placing the chances of a December rate hike at 100.0%. The 10 year U.S. Treasury note closed Friday at 2.39%, up about 6 basis points for the week.

November 13 – November 17 Economic Calendar

  • Monday
  • Treasury Budget
    2:00 PM ET
  • NFIB Small Business Optimism Index
    6:00 AM ET
  • James Bullard Speaks
    8:15 AM ET
  • PPI-FD
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Business Inventories
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Eric Rosengren Speaks
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Charles Evans Speaks
    3:05 AM ET
  • NFIB Small Business Optimism Index
    6:00 AM ET
  • James Bullard Speaks
    8:15 AM ET
  • PPI-FD
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Business Inventories
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Eric Rosengren Speaks
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • Charles Evans Speaks
    3:00 AM ET
  • MBA Mortgage Applications
    7:00 AM ET
  • Consumer Price Index
    8:30 AM ET
  • Retail Sales
    8:30 AM ET
  • Empire State Mfg Survey
    8:30 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Business Inventories
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Eric Rosengren Speaks
    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
  • Import and Export Prices
    8:30 AM ET
  • Loretta Mester Speaks
    9:10 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
  • Robert Kaplan Speaks
    1:10 PM ET
  • Lael Brainard Speaks
    3:45 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Housing Starts
    8:30 AM ET

  • E-Commerce Retail Sales
    10:00 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Redbook
    8:55 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Business Inventories
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Eric Rosengren Speaks
    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.