Telemus Weekly Market Review

June 18 – June 22, 2018

Stocks fell last week as trade tensions helped to keep most buyers on the sidelines. The benchmark S&P 500 index ended the week lower by 0.89%. The tech-heavy Nasdaq lost 0.69%, but was able to reach a new all-time high on Wednesday, and the Dow Jones Industrial Average fared the worst falling 2.03% on the week.

At the start of the week, investors were still weighing the prospect of a trade war between the U.S. and China after President Trump confirmed that he had approved a 25% tariff on $50 billion worth of Chinese goods. Beijing responded swiftly to that news, vowing to implement equivalent duties on U.S. goods.

The story got more complicated on Monday evening when the president asked his administration to identify an additional $200 billion worth of Chinese goods that he said will be hit with a 10% tariff should China follow through on its promise to retaliate. In addition, if China retaliates against the new $200 billion list, President Trump indicated he will place tariffs on yet another $200 billion worth of Chinese goods.

The industrial sector, which is viewed as being in the crosshairs of protectionist trade actions, was the worst-performing S&P 500 group for the week, losing 3.4%. Similarly, chipmakers, which derive a large chunk of their revenue from shipments to China, were also under pressure, sending the Philadelphia Semiconductor Index lower by 3.6%.

President Trump issued another tariff threat on Friday, this time targeting the European Union. The president said the U.S. will be imposing a 20% tariff on all automobiles imported from EU countries if the EU fails to remove duties on imports of U.S. automobiles. On a related note, as of Friday, the European Union has officially implemented tariffs on $3.2 billion worth of U.S. goods in retaliation to U.S. tariffs on imports of steel and aluminum that went into effect earlier this month.

Elsewhere, the Organization of Petroleum Exporting Countries (OPEC) met in Vienna last week to discuss easing production caps that have been in place for more than 18 months. The meeting was reportedly contentious, but the countries eventually agreed to boost oil output by a less-than-expected 600,000 barrels per day. WTI crude futures rallied to a four-week high on Friday following the news, closing at $69.28 a barrel, and the energy sector reclaimed losses registered earlier in the week, finishing with a weekly gain of 1.5%.

In U.S. corporate news, Walgreens Boots Alliance will be joining the Dow Jones Industrial Average on June 26, taking the spot of General Electric, which was one of the original Dow components and has been a continuous part of the average for more than a century. The decision, which puzzled some market observers, follows a disastrous 18-month stretch for GE shares, which have dropped around 60% since the end of 2016.

Separately, media names returned to the spotlight on Wednesday when Walt Disney increased its offer for 21st Century Fox’s entertainment assets. Disney is now offering $38 per share, up from its previous offer of $28 per share and better than last week’s rival offer from Comcast of $35 per share.

E-commerce companies, including Amazon, sold off on Thursday after the U.S. Supreme Court ruled that states can require online retailers to collect sales tax, overturning a 1992 precedent.

Otherwise in a surprising development, Intel’s chief executive, Brian Krzanich, resigned after it was revealed he had broken the company’s non-fraternization policy. Oracle shares dropped to a 15-month low after the company’s quarterly update provided less insight than usual into its growing cloud business, and Starbucks shares hit a three-year low after the company announced it will be scaling back store growth.

U.S. Treasuries ended the week on a modestly higher note, pushing the benchmark 10-yr yield lower by two basis points to 2.90%.

January 25-29 What To Look For

  • Monday
  • Chicago Fed National Activity Index
    8:30 AM ET
  • New Home Sales
    10:00 AM ET
  • Dallas Fed Mfg Survey
    10:30 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Robert Kaplan Speaks
    1:45 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Eric Rosengren Speaks
    12:15 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • 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
  • Robert Kaplan Speaks
    1:45 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Eric Rosengren Speaks
    12:15 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Durable Goods Orders
    8:30 AM ET
  • International Trade in Goods
    8:30 AM ET
  • Retail Inventories [Advance]
    8:30 AM ET
  • Wholesale Inventories [Advance]
    8:30 AM ET
  • Pending Home Sales Index
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Eric Rosengren Speaks
    12:15 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • GDP
    8:30 AM ET

  • Jobless Claims
    8:30 AM ET
  • Corporate Profits
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • James Bullard Speaks
    10:45 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Farm Prices
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Personal Income and Outlays
    8:30 AM ET

  • Chicago PMI
    9:45 AM ET

  • Consumer Sentiment
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • Robert Kaplan Speaks
    1:45 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Eric Rosengren Speaks
    12:15 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.