Telemus Weekly Market Review

February 13 – 17, 2017

Another week and another round of gains for the major stock averages. The markets did not seem to care much about talk that some of the recent turmoil surrounding the Trump administration could slow the Republican legislative momentum. The Dow was up 1.75%, the Nasdaq rose 1.82% and the S&P 500 climbed 1.51% to record its fourth consecutive weekly advance. The benchmark index has now posted gains in five of the first seven weeks of 2017, rising over 5.0%. Financials and healthcare were the standouts this week, up over 2.5%. Energy was down 2% while the bond proxies tended to lag as well.

The week was highlighted by Fed Chair Janet Yellen’s semiannual testimony to Congress, which took place on Tuesday and Wednesday. The market handled the testimony well even though Chair Yellen’s comments showed the Fed may need to adjust its rate hike outlook as the year goes on. Specifically, Senator Pat Toomey asked Ms. Yellen why the Fed didn’t really bump up its growth projections at all at the December meeting when many other bodies, like the IMF, have bumped up their 2017 growth prospects based on a belief that the implementation of fiscal stimulus in the U.S. will have a positive effect on growth. Ms. Yellen said most of her colleagues refrained from doing so because they wanted greater clarity on the time, scope, and composition of any fiscal changes before making assumptions on the growth outlook. In sum, the comments showed that the Fed will be required to raise rates faster than it currently expects if fiscal measures end up boosting economic growth-a notion that has been bought fully by the stock market.

The market also saw continued support stemming from President Donald Trump’s announcement that a “phenomenal” tax reform package was going to be announced in the next couple weeks.

The visions of tax reform and nothing but good things on the fiscal front kept a bid under the stock market, even though the latest round of inflation data showed hotter than expected PPI (+0.6%; Briefing.com consensus 0.3%) and CPI (+0.6%; Briefing.com consensus 0.3%) in January.

The week’s steady rise in the stock market took place even though rate hike expectations were pulled forward, briefly showing a 50.0%+ likelihood of a rate hike in May. By the end of the week, the implied likelihood of a May hike was down to 44.1% while the probability of a June hike ended the week at 69.9%, up slightly from last Friday’s 68.3%. The 10 year U.S. Treasury note closed Friday at 2.42% basically unchanged for the week despite spiking over 2.51% on Wednesday.

Crude closed at $53.37 in NYMEX trading on Friday, down marginally for the week.

February 20 – 24 Economic Calendar

  • Monday
  • Markets Closed
  • PMI Manufacturing Flash Index
    9:45 AM ET
  • John Williams Speaks
    3:30 PM ET
  • Housing Market Index
    10:00 AM ET
  • Jerome Powell Speaks
    1:00 PM ET
  • FOMC Minutes
    2:00 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • EIA Petroleum Status Report
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Neel Kashkari Speaks
    8:50 AM ET
  • PMI Manufacturing Flash Index
    9:45 AM ET
  • John Williams Speaks
    3:30 PM ET
  • Housing Market Index
    10:00 AM ET
  • Jerome Powell Speaks
    1:00 PM ET
  • FOMC Minutes
    2:00 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • EIA Petroleum Status Report
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Redbook
    8:55 AM ET
  • Existing Home Sales
    10:00 AM ET
  • Housing Market Index
    10:00 AM ET
  • Jerome Powell Speaks
    1:00 PM ET
  • FOMC Minutes
    2:00 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • EIA Petroleum Status Report
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • Chicago Fed National Activity Index
    8:30 AM ET
  • Dennis Lockhart Speaks
    8:35 AM ET
  • FHFA House Price Index
    9:00 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • PMI Services Flash
    9:45 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • EIA Petroleum Status Report
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • New Home Sales
    10:00 AM ET

  • Consumer Sentiment
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Housing Market Index
    10:00 AM ET
  • Jerome Powell Speaks
    1:00 PM ET
  • FOMC Minutes
    2:00 PM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • EIA Petroleum Status Report
    11:00 AM 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.