Telemus Weekly Market Review

July 2 – July 6, 2018

Last week was an abbreviated week of trading due to the mid-week Fourth of July holiday, yet there were plenty of fireworks for investors who enjoyed a winning week for the major indices. For the week the S&P gained 1.52%, the Dow Jones rose by 0.76%, and the technology heavy Nasdaq led the way, up 2.37%.
The bullish bias was remarkable in that concerns about protectionist trade measures were discussed throughout the week. Those concerns however did not derail the stock market, but they did not go unnoticed.

Some of last week’s best-performing sectors were the defensive-oriented health care, utilities, and telecom services sectors. Meanwhile, the yield on the benchmark 10-yr U.S. Treasury note dropped three basis points to 2.82%, which gave a lift to the real estate sector.

By and large, though, it was a risk-on week in the stock market, which moved up on the back of gains in every sector but the energy sector. The latter moved in tandem with oil prices, which dropped 0.5% to $73.77 a barrel pressured by a bearish inventory report from the Department of Energy and assumptions that Saudi Arabia will tap into its spare capacity to maintain stability in the oil market.

The information technology sector, supported by the usual mega-cap suspects, was a standout yet again last week, bringing its year-to-date gain to 12.7%. Facebook for its part increased 4.6% last week, with the entirety of its gain coming over the last two trading sessions. Mark Zuckerberg has now surpassed Warren Buffet in the rankings of the world’s wealthiest people.

Those last two trading sessions of the week were governed by indifferent trading behavior, as the major indices advanced in the face of the FOMC Minutes highlighting how business contacts in some districts indicated they were scaling back, or postponing, capital spending plans as a result of the uncertainty over trade policy and the U.S. and China pressing ahead with the implementation of tariffs on $34 billion worth of imported goods from each other.

There was no uncertainty on Friday following the release of the June employment report. Market participants seemingly rejoiced in the understanding that the report once again had a Goldilocks hue to it, featuring solid nonfarm payrolls growth and a subdued 2.7% year-over-year gain in average hourly earnings that kept inflation worries, and aggressive rate-hike worries, at bay for now.

That economic report overshadowed the troublesome trade developments, which included a contention by President Trump that the U.S. could possibly levy tariffs on more than $500 billion of Chinese goods if necessary. The stock market made note of the remark, yet it was not unnerved by it, as the week’s market action showed.

The U.S. Dollar Index settled the week 0.7% lower at 94.01 while the CBOE Volatility Index plunged 16.9% to 13.37, underscoring a lack of hedging interest to protect for near-term downside risk. The entirety of the decline in the CBOE Volatility Index came over the last two trading days of the shortened week.
Not surprisingly, trading volume was on the light side last week as many investors took vacation, including the author.

July 9 – July 13 Economic Calendar

  • Monday
  • Neel Kashkari Speaks
    9:10 AM ET
  • TD Ameritrade IMX
    12:30 PM ET
  • Consumer Credit
    3:00 PM ET
  • Wholesale Trade
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • John Williams Speaks
    4:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Neel Kashkari Speaks
    8:00 PM ET
  • Tuesday
  • NFIB Small Business Optimism Index
    6:00 AM ET

  • Redbook
    8:55 AM ET
  • JOLTS
    10:00 AM ET
  • Wholesale Trade
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • John Williams Speaks
    4:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Neel Kashkari Speaks
    8:00 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • PPI-FD
    8:30 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Wholesale Trade
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • John Williams Speaks
    4:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Neel Kashkari Speaks
    8:00 PM ET
  • Thursday
  • Consumer Price Index
    8:30 AM ET

  • Jobless Claims
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Patrick Harker Speaks
    12:15 PM ET
  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Neel Kashkari Speaks
    8:00 PM ET
  • Friday
  • Import and Export Prices
    8:30 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Raphael Bostic Speaks
    12:30 PM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • John Williams Speaks
    4:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Neel Kashkari Speaks
    8:00 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.