Telemus Weekly Market Review

February 20 – 24

The stock market appeared to be in jeopardy of recording its first down week in a month, but a recovery on Friday afternoon helped the S&P 500 add 0.69% for the holiday-shortened week, extending its first quarter gain to 5.7%. The Dow was the big winner, up 0.96% for the week, while the Nasdaq lagged closing up “just” 0.12%.

Equity indices motored higher to start the week, but investor sentiment soured a bit on Thursday, after Axios reported that Republican lawmakers are likely to delay a decision on infrastructure spending until 2018, giving Congress time to focus on tax and health care reform in 2017. The news weighed on construction and engineering names with Caterpillar falling 3.3% during the final two sessions of the week.

However, the overall stock market took the news in stride, which was impressive, considering pro-growth policies were cited for the post-election charge that lifted the S&P 500 to a fresh record. The market did see some selling on Friday morning, but dip buyers helped the benchmark index turn positive by the close.

The week was very quiet on the economic front, but investors did receive the most recent policy minutes from the Federal Open Market Committee. The minutes acknowledged that a rate hike will be in order fairly soon, if incoming data on jobs and inflation remains in line with expectations.

This week brought some additional concerns that the post-election rally may overdone. However, there really did not seem to be anything particularly incremental. The usual suspects such as overly optimistic policy expectations and stretched valuations were among the go-to excuses.

It is worth noting that some members of the FOMC expressed concern that low volatility in equity markets is inconsistent with considerable uncertainty attached to the outlook for changes to the fiscal landscape. The CBOE Volatility Index held its ground in the 11.50% area, ending the week well below its 200-day moving average.
Rate hike expectations saw limited movement during the past week. The implied likelihood of a hike in May ticked up to 50.4% from last week’s 44.1% while the implied probability of a rate hike in June slipped to 66.5% from last Friday’s 69.9%. The 10 year U.S. Treasury note ended the week at 2.31% a drop of over 10 basis points from the previous week’s close. Buying was driven by concerns over the French election and a flight to safety as both U.S. and German bonds found a bid.

Crude oil finished marginally higher for the week closing Friday at $54.02 in NYMEX trading.

February 6 – 10 Economic Calendar

  • Monday
  • Durable Goods Orders 8:30 AM ET
  • Pending Home Sales Index
    10:00 AM ET
  • Robert Kaplan Speaks
    11:00 AM ET
  • S&P Corelogic Case-Shiller HPI
    9:00 AM ET
  • Chicago PMI
    9:45 AM ET
  • Consumer Confidence
    10:00 AM ET
  • Esther George Speaks
    12:45 PM ET
  • Farm Prices
    3:00 PM ET
  • John Williams Speaks
    3:30 PM ET
  • James Bullard Speaks
    6:30 PM ET
  • Tuesday
  • GDP
    8:30 AM ET

  • International Trade in Goods
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • S&P Corelogic Case-Shiller HPI
    9:00 AM ET
  • Chicago PMI
    9:45 AM ET
  • Consumer Confidence
    10:00 AM ET
  • Esther George Speaks
    12:45 PM ET
  • Farm Prices
    3:00 PM ET
  • John Williams Speaks
    3:30 PM ET
  • James Bullard Speaks
    6:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Personal Income and Outlays
    8:30 AM ET
  • PMI Manufacturing Index
    9:45 AM ET
  • ISM Mfg Index
    10:00 AM ET
  • Construction Spending
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Robert Kaplan Speaks
    12:30 PM ET
  • Beige Book
    2:00 PM ET
  • John Williams Speaks
    3:30 PM ET
  • James Bullard Speaks
    6:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • Bloomberg Consumer Comfort Index
    9:45 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
    7:00 PM ET
  • Esther George Speaks
    12:45 PM ET
  • Farm Prices
    3:00 PM ET
  • John Williams Speaks
    3:30 PM ET
  • James Bullard Speaks
    6:30 PM ET
  • Friday
  • PMI Services Index
    9:45 AM ET

  • ISM Non-Mfg Index
    10:00 AM ET
  • Charles Evans Speaks
    10:15 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Janet Yellen Speaks
    1:00 PM ET
  • Consumer Confidence
    10:00 AM ET
  • Esther George Speaks
    12:45 PM ET
  • Farm Prices
    3:00 PM ET
  • John Williams Speaks
    3:30 PM ET
  • James Bullard Speaks
    6:30 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.