Telemus Weekly Market Review

September 18 – September 23, 2017

Stocks held steady this past week as investors digested the latest FOMC policy announcement, which was released on Wednesday afternoon. The major indices ticked up to new record highs in the first half of the week, but faltered a bit the rest of the way. For the week the S&P 500 ticked up 0.08% while the Dow, up 0.36%, did a little better and the Nasdaq , down 0.33%, did a little worse.

The Fed’s latest policy directive came in pretty much as expected. The FOMC unanimously voted to leave the fed funds target range at 1.00%-1.25% and announced that it will start its balance sheet normalization process in October. Meanwhile, the Fed’s so-called “dot plot” was unchanged from the one released in June, showing that the median FOMC member still anticipates an additional rate hike in 2017 and three rate hikes in 2018.

Accordingly, investors upwardly adjusted their rate-hike expectations, evidenced by the fed funds futures market, which now places the chances of a December rate hike at 72.8% up from 57.8% last week and 31.9% the week before that. Bonds sold off for the second week in a row following the FOMC announcement, sending yields higher across the curve. The 2-yr yield climbed six basis points to 1.44%, hitting its highest level in nearly nine years, while the benchmark 10-yr yield also jumped six basis points to lose on Friday at 2.26%.

Within the equity market, the heavily-weighted financial sector finished near the top of the sector standings, benefiting from the prospect of heightened interest rates and some sector rotation. The financial group has trailed the broader market for much of the year, but has been making a come back over the last two weeks; the sector has added 6.9% since September 7th.

The telecom services group also put together a solid performance this week, trimming its year-to-date loss to 8.5%, amid reports that Sprint and T-Mobile US are nearing a merger deal after more than four months of on-and-off talks. The two companies settled the week with gains of 10.8% and 4.7%, respectively.

On the flip side, the top-weighted technology sector underperformed, thanks in large part to Apple, which dropped 5.0%. There were rumors of softer-than-expected demand for the new iPhone 8, which hit stores on Friday, but this week’s slide was also likely due to some end-of-quarter profit taking following yet another solid three-month stretch for the company. AAPL shares will enter Monday’s session with a quarter-to-date gain of 5.5% and a year-to-date gain of 31.1%.

Countercyclical groups like health care, consumer staples, and utilities also struggled this week while cyclical groups like materials, industrials, and energy finished with sizable gains.

In politics, President Trump made his United Nations debut on Tuesday, taking a hard stance against North Korea. The hermit nation later criticized the president for his comments and threatened to test a hydrogen bomb in the Pacific Ocean.

Meanwhile, a new health-care bill written by Senators Lindsey Graham and Bill Cassidy gained support within the GOP this week, but its passage looks unlikely after Senators Rand Paul and John McCain voiced their opposition and Senator Susan Collins said she is leaning towards voting ‘no.’ The GOP can only afford to lose two votes in the Senate, assuming Vice President Mike Pence votes in favor of the bill in the event of a tie.

Crude oil closed Friday at $50.66 in NYMEX trading, up slightly from last weeks close.

September 25 – September 29 Economic Calendar

  • Monday
  • William Dudley Speaks
    8:30 AM ET
  • Chicago Fed National Activity Index
    8:30 AM ET
  • Dallas Fed Mfg Survey
    10:30 AM ET
  • Charles Evans Speaks
    12:40 PM ET
  • Neel Kashkari Speaks
    6:30 PM ET
  • Consumer Confidence
    10:00 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Janet Yellen Speaks
    11:50 AM ET
  • Raphael Bostic Speaks
    12:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Redbook
    8:55 AM ET

  • S&P Corelogic Case-Shiller HPI
    9:00 AM ET
  • Charles Evans Speaks
    9:30 AM ET
  • Loretta Mester Speaks
    9:30 AM ET
  • New Home Sales
    10:00 AM ET
  • Consumer Confidence
    10:00 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Janet Yellen Speaks
    11:50 AM ET
  • Raphael Bostic Speaks
    12:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Durable Goods Orders
    8:30 AM ET
  • Neel Kashkari Speaks
    9:15 AM ET
  • Pending Home Sales Index
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • James Bullard Speaks
    1:30 PM ET
  • Eric Rosengren Speaks
    7:00 PM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Janet Yellen Speaks
    11:50 AM ET
  • Raphael Bostic Speaks
    12:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • GDP
    8:30 AM ET

  • International Trade in Goods
    8:30 AM ET
  • Jobless Claims
    8:30 AM ET
  • Corporate Profits
    8:30 AM ET
  • Esther George Speaks
    9:45 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Farm Prices
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Personal Income and Outlays
    8:30 AM ET

  • Chicago PMI
    9:45 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Patrick Harker Speaks
    11:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Consumer Confidence
    10:00 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Janet Yellen Speaks
    11:50 AM ET
  • Raphael Bostic Speaks
    12:30 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.