Telemus Weekly Market Review

June 11 – June 15

Despite a steady stream of news last week the S&P 500 failed to be impressed. The benchmark index barely budged ending the week up 0.02%. The tech-heavy Nasdaq outperformed, adding 1.32% last week, while the Dow lagged, losing 0.89%.

The story really began over last weekend when the annual Group of Seven meeting, which was held in Quebec, ended on an uncharacteristically contentious note. President Trump was prepared to sign the customary joint statement, but changed his mind on the way home following what the White House deemed as “inappropriate” comments from Canadian Prime Minister Justin Trudeau.

The world then turned its attention to Singapore, where President Trump met with North Korean leader Kim Jong Un on Tuesday in a historic summit that marked the first ever meeting between a sitting U.S. president and a North Korean leader. The meeting ended with a joint statement in which North Korea reaffirmed its commitment to completely denuclearize and the U.S. promised “security guarantees” including the suspension of military exercises on the Korean Peninsula.

Monetary policy took center stage midweek when the U.S. Federal Reserve released its latest policy directive. The Fed decided to raise interest rates for the second time this year, increasing the fed funds target range by a quarter point from 1.75% to 2.00%, and upped its interest-rate forecast to include a total of four rate increases this year. The market had expected the rate hike, but the updated forecast took some investors by surprise.

Overseas, the European Central Bank released its latest policy directive on Thursday. As expected, the ECB left its key policy rate unchanged and announced a plan to end its asset purchase program. The ECB in September will cut its monthly purchases in half, from 30 billion euro to 15 billion, and then end purchases altogether three months later although it will continue to reinvest the principal from maturing securities. As for interest rates, the ECB said they will remain at their present levels “at least through the summer of 2019.” That statement was credited with sending the euro down more than 1.0% against the U.S. dollar.

The Bank of Japan also conducted a policy meeting last week, but made no changes to its key interest rate. However, they did downgrade their view on inflation, further highlighting the difference between the Bank of Japan, which is struggling to end its crisis-era stimulus, and the U.S. Fed, which continues to progress on a path to interest rate normalization.

Back at home, media names were in focus after a federal judge on Tuesday ruled in favor of AT&T in its lengthy legal battle with the Justice Department. The ruling allowed AT&T to move forward with its acquisition of Time Warner, which it closed on Thursday, and set the stage for more merger activity in the future. Comcast, for instance, outdid Disney’s all-stock bid for the bulk of 21st Century Fox’s assets following the ruling, offering $65 billion in cash.

The world’s appetite for oil should remain robust throughout next year even as U.S. production continues to dominate supply growth, the International Energy Agency said Wednesday. In its closely watched monthly oil market report, the IEA laid out for the first time its oil demand forecast for next year, saying it expects demand to grow by 1.4 million barrels a day in 2019, on par with this year. Crude oil closed at $64.38 in Nymex trading Friday as a rise in crude supplies in the U.S. spooked the market.

In politics, trade war fears were reignited on Friday after President Trump confirmed that he’s approved a 25% tariff on $50 billion worth of Chinese goods. China responded swiftly, announcing that it’ll impose a 25% tariff on $34 billion worth of U.S. goods on July 6, the same day the U.S. tariffs are scheduled to take effect. The 10 year U.S. Treasury note ended Friday’s trading at a yield of 2.92% down slightly from last week’s close despite the Fed’s announcement.

June 18 – June 22 Economic Calendar

  • Monday
  • Housing Market Index
    10:00 AM ET
  • Raphael Bostic Speaks
    1:00 PM ET
  • John Williams Speaks
    4:00 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Tuesday
  • James Bullard Speaks
    7:00 AM ET

  • Housing Starts
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Current Account
    8:30 AM ET
  • Existing Home Sales
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • Philadelphia Fed Business Outlook Survey
    8:30 AM ET
  • FHFA House Price Index
    9:00 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Friday
  • PMI Composite Flash
    9:45 AM ET

  • Baker-Hughes Rig Count
    1:00 PM ET
  • John Williams Speaks
    4:00 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 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.