Telemus Weekly Market Review

April 9 – April 13 Week in Review

Last week was a good week for the markets in terms of gains, but volume was light, pointing to a lack of conviction among investors who spent the week digesting a steady stream of headlines. The tech-heavy Nasdaq Composite led the major indices higher, adding 2.77%, while the S&P 500 and the Dow Jones Industrial Average advanced 1.99% and 1.79%, respectively.

The stock market began the week on a positive note following interviews from several White House officials, including Treasury Secretary Steven Mnuchin, which helped to alleviate fears that the U.S. is barreling towards a trade war with China. Chinese President Xi Jinping helped further improve investor sentiment with a speech at the Boao Forum on Tuesday, saying that he plans to “significantly” cut tariffs on imported automobiles, reduce duties on other imported goods, and improve the intellectual property rights of foreign firms.

Moving to the Middle East, geopolitical tensions were heightened following a suspected chemical attack from the Syrian government on the rebel-held town of Douma that killed at least 40 people. The situation escalated even further on Wednesday morning when Russia, which supports Syrian President Bashar al-Assad, warned that it would shoot down any missiles fired at Syria — to which President Trump replied “get ready Russia, because they will be coming.” On Friday night President Trump announced U.S., British and French forces had launched airstrikes targeting sites associated with Syria’s chemical-weapons capabilities. The decision to strike was aimed at cutting off the production and use of chemical weapons in the country, Trump said.

In addition to the situation in Syria, a missile attack aimed at Saudi Arabia by pro-Iranian rebels in Yemen served to further escalate tensions in the region. Saudi air defense forces intercepted one missile over the capital Riyadh on Wednesday, while two others were intercepted over the southern areas of Jazan and Najran.

With all the concerning headlines out of the oil-rich Middle East, traders pushed oil prices substantially higher during the week, betting that the tensions will eventually lead to a slowdown in production. West Texas Intermediate crude futures surged 8.4% to $67.26 per barrel, closing Friday at their highest level in more than three years. The S&P 500’s energy sector benefited from the jump in oil prices, finishing at the top of the week’s sector standings by a comfortable margin; the group added 6.0%.

In Washington, Facebook CEO Mark Zuckerberg testified on Capitol Hill, answering questions regarding the company’s Cambridge Analytica data scandal and Russia’s alleged use of Facebook to influence the 2016 U.S. presidential election. Mr. Zuckerberg was grilled for 10 hours by nearly 100 lawmakers, but the market seemed satisfied with his answers. Facebook shares climbed 5.3% over the two days of testimony, eventually finishing the week with a gain of 4.7%.

On Friday, big banks kicked off the first quarter earnings season, with JPMorgan Chase, Wells Fargo, and Citigroup all beating profit estimates on in-line revenues. However, shares of the three lenders, and the broader financial sector, sold off in the wake of the reports. The financial sector settled the week with a gain of 1.0%, which placed it in the middle of the sector standings. The lightly-weighted utilities and real estate groups finished at the back of the pack, losing a little more than 1.0% apiece.

Investors received the minutes from the March FOMC meeting last week, but the report contained few surprises. Some key inflationary data was also released namely the CPI readings for March but it was met with a largely muted response from the market. In short, the consumer prices report showed a firming (though not scary) inflation trend that will keep the Federal Reserve wedded to its tightening bias and its belief that at least two more rate hikes are warranted this year.

The CME FedWatch Tool still anticipates that the next rate hike will occur at the June FOMC meeting with an implied probability of 95.0% (up from 85.2% last week). The market also still believes there will be a total of three rate hikes in 2018, but the chances for a fourth hike increased to 36.8% (from 26.3% last week). The 10 year U.S. Treasury note closed at a yield of 2.82% up from last week’s closing yield of 2.78%.

April 16 – April 20 Economic Calendar

  • Monday
  • Retail Sales
    8:30 AM ET
  • Empire State Mfg Survey
    8:30 AM ET
  • Business Inventories
    10:00 AM ET
  • Housing Market Index
    10:00 AM ET
  • Raphael Bostic Speaks
    1:15 PM ET
  • Treasury International Capital
    4:00 PM ET
  • Charles Evans Speaks
    1:40 PM ET
  • Loretta Mester Speaks
    6:45 PM ET
  • Tuesday
  • Housing Starts
    8:30 AM ET

  • Redbook
    8:55 AM ET
  • Industrial Production
    9:15 AM ET
  • John Williams Speaks
    9:15 AM ET
  • Randal Quarles Speaks
    10:00 AM ET
  • Patrick Harker Speaks
    11:00 AM ET
  • Charles Evans Speaks
    1:40 PM ET
  • Loretta Mester Speaks
    6:45 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • William Dudley Speaks
    8:30 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Beige Book
    2:00 PM ET
  • William Dudley Speaks
    3:15 PM ET
  • Treasury International Capital
    4:00 PM ET
  • Charles Evans Speaks
    1:40 PM ET
  • Loretta Mester Speaks
    6:45 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
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Loretta Mester Speaks
    6:45 PM ET
  • Friday
  • Charles Evans Speaks
    9:40 AM ET

  • John Williams Speaks
    11:15 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Housing Market Index
    10:00 AM ET
  • Raphael Bostic Speaks
    1:15 PM ET
  • Treasury International Capital
    4:00 PM ET
  • Charles Evans Speaks
    1:40 PM ET
  • Loretta Mester Speaks
    6:45 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.