Telemus Weekly Market Review

July 9 – July 13, 2018

Stocks advanced for the second week in a row last week. The Nasdaq gained +2.30% touching a new record high, the S&P 500 rose +1.50% hitting its best level since the big drop in early February, and the Dow Jones Industrial Average advanced +2.30% outperforming its peers and returning to positive territory for the year.

Markets started the week on a positive note, rallying on Monday and Tuesday, but sold off on Wednesday after the White House escalated its ongoing trade dispute with Beijing, publishing a new list of tariffs. This round of duties is the largest yet, calling for a 10% tariff on $200 billion worth of Chinese goods, but it won’t be official for at least two months. As it did with earlier tariffs, China promised to retaliate.

Meanwhile, NATO leaders held a two-day summit in Brussels last week. President Trump dominated the headlines, criticizing Germany for approving a major gas deal with Russia and taking a hard stance on increased military spending. Member states recommitted to a military spending target of 2% of GDP by 2024, prompting Mr. Trump to verbally confirm his commitment to the alliance.

The U.S. president then jetted to the UK for a meeting with Prime Minister Theresa May. Before the meeting, Mr. Trump suggested that Ms. May’s Brexit plan may prevent the U.S. from entering a bilateral trade deal with the UK, but he walked back those comments in a latter press conference, reaffirming the leaders’ “special relationship.”

Back on the home front, West Texas Intermediate crude futures tumbled from a three-and-a-half year high on Wednesday, plunging 5.0% in their worst daily performance in over a year. Investors shrugged off a bullish inventory report which showed a huge drop of 12.6 million barrels for the week ended July 6 and instead focused on resurgent Libyan supply and increased June output for Saudi Arabia. Crude closed at $70.58 on Friday, a drop of over $3 a barrel on the week.

As a result the energy sector, which is sensitive to crude prices, finished behind the broader market. Eight of eleven sectors finished last week in the green, with information technology, consumer discretionary, and industrials being the top performers. Utilities, telecom services, and real estate were the three decliners.

In corporate news, big banks JPMorgan Chase, Citigroup, and Wells Fargo unofficially kicked off the second quarter earnings season on Friday with mixed results; JPMorgan and Citigroup beat earnings estimates, but Wells Fargo missed. The financial sector lost 0.5% on Friday, but still finished the week with a gain of 1.1%.

Elsewhere, 21st Century Fox lost 4.0% on Wednesday following reports that Comcast may forego countering Disney’s offer for Fox’s entertainment assets and focus on upping its bid for British media company Sky instead; Broadcom tumbled 13.7% on Thursday after surprising investors and agreeing to acquire software company CA Tech for approximately $18.9 billion in cash; and AT&T lost 1.7% on Friday after the Department of Justice appealed the company’s acquisition of Time Warner.

In the bond market, U.S. Treasuries moved lower in another curve-flattening trade last week, bringing the 2 year -10 year spread down two basis points to 26 bps its lowest level in more than a decade. The yield on the benchmark 10-yr note ticked up one basis point to 2.83%, while the yield on the 2-yr note climbed three basis points to 2.57%.

July 16 – July 20 Economic Calendar

  • Monday
  • Retail Sales
    8:30 AM ET
  • Empire State Mfg Survey
    8:30 AM ET
  • Business Inventories
    10:00 AM ET
  • Jerome Powell Speaks
    10:00 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Redbook
    8:55 AM ET

  • Industrial Production
    9:15 AM ET
  • Housing Market Index
    10:00 AM ET
  • Jerome Powell Speaks
    10:00 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Housing Starts
    8:30 AM ET
  • Jerome Powell Speaks
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Beige Book
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 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
  • Friday
  • Baker-Hughes Rig Count
    1:00 PM ET

  • Empire State Mfg Survey
    8:30 AM ET
  • Business Inventories
    10:00 AM ET
  • Jerome Powell Speaks
    10:00 AM ET
  • Treasury International Capital
    4:00 PM 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.