Telemus Weekly Market Review

August 20 – August 24, 2018

It was a record breaking week for the stock market last week as the S&P500, the Nasdaq and the Russell 2000 all reached record highs. The S&P 500 advanced 0.86%, closing Friday at a new record high for the first time since late January, the Dow gained 0.47%, the Nasdaq rose 1.66% and the Russell 2000 was the big winner, up 1.93%. Political uncertainty, trade talk ambiguity, and strengthened expectations for two more rate hikes this year all failed to dissuade motivated buyers last week, pushing stocks higher in three of the week’s five sessions.

The week started on a mildly positive note, with stocks ticking higher on Monday and Tuesday, but investors were cautious over the next two sessions, largely due to the legal woes of President Trump’s former campaign manager, Paul Manafort, and his longtime personal lawyer, Michael Cohen.

Mr. Manafort was convicted of tax and bank fraud on Tuesday afternoon, while Mr. Cohen pleaded guilty to a range of charges, including tax fraud and excessive campaign contributions, and implicated President Trump directly by saying that the president directed him to pay two women hush money “for the principal purpose of influencing the election.”

It’s too early to say what these developments will mean for President Trump’s political future, but it’s worth noting that he chose to say, in regards to the situation, that the market would crash “if I ever got impeached” and that “I don’t know how you can impeach somebody who has done a great job.”

Moving on to the trade front, two days of talks between the U.S. and China wrapped up on Thursday without any visible sign of progress on an agreement. President Trump said beforehand that he wasn’t expecting much to come out of the talks, which marked the first official negotiations since a breakdown nearly three months ago.

In monetary policy, President Trump reiterated his displeasure with the Fed on Monday, saying he was “not thrilled” with Fed Chair Jerome Powell for raising rates. Two days later, the Fed released the minutes from the July/August FOMC meeting, which only strengthened the expectation that the U.S. central bank will hike rates at its September meeting, with officials saying in the minutes that it would likely “soon” be appropriate to raise rates. On Friday, Fed Chairman Powell gave a speech at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming, saying that gradual rate hikes remain appropriate. Mr. Powell also expressed confidence in the economy and said he doesn’t see any signs of inflation getting out of hand.

Seven of eleven sectors advanced last week, with cyclical groups showing the best relative strength. The energy sector was the top performer rebounding from the previous week’s 3.6% tumble helped by an increase in crude prices; West Texas Intermediate crude futures climbed 4.2% last week to close Friday at $68.66 per barrel.

Meanwhile, the consumer discretionary sector also outperformed amid a steady flow of retail earnings. TJX jumped 4.7% on Tuesday after reporting better-than-expected results, while Lowe’s and Target added 5.8% and 3.2%, respectively, on Wednesday after also beating estimates. On the downside, the four declining sectors were consumer staples, utilities, telecom services, and real estate.

The 10 year U.S. Treasury note ended the week at 2.82% a slight drop from the previous week’s close.

August 27 – August 31 Economic Calendar

  • Monday
  • Chicago Fed National Activity Index
    8:30 AM ET
  • Dallas Fed Mfg Survey
    10:30 AM ET

  • Wholesale Inventories [Advance]
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • S&P Corelogic Case-Shiller HPI
    9:00 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
  • Tuesday
  • International Trade in Goods
    8:30 AM ET

  • Retail Inventories [Advance]
    8:30 AM ET
    FHFA House Price Index

  • Wholesale Inventories [Advance]
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • S&P Corelogic Case-Shiller HPI
    9:00 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
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • GDP
    8:30 AM ET
  • Corporate Profits
    8:30 AM ET
  • Pending Home Sales Index
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Farm Prices
    3:00 PM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • Personal Income and Outlays
    8:30 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 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
  • Friday
  • Chicago PMI
    9:45 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Redbook
    8:55 AM ET
  • S&P Corelogic Case-Shiller HPI
    9:00 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

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.