Telemus Weekly Market Review

March 12-16, 2018

Stocks reversed course last week, undoing about a third of the previous week’s rally, as investors continued to search for equilibrium following the abrupt sell off that took place in early February. Since that drop, the S&P 500 has had three up weeks and two down weeks, reclaiming around 60% of its nearly 300-point plunge. For the week the S&P 500 lost 1.24%, while the Nasdaq Composite and the Dow Jones Industrial Average declined 1.04% and 1.54%, respectively.

Trade war talk continued last week following reports that President Trump is seeking to hit China with steep tariffs and investment restrictions as early as next week. Those tariffs, which are expected to total as much as $60 billion, would initially be targeted towards information technology, telecommunications, and consumer electronic products as punishment for alleged intellectual property theft, but could eventually expand to a broader range of products.

The proposed tariffs were cited as the primary driver of the sell off, as many believe they could lead to a tit-for-tat trade war between the world’s two largest economies. Peter Navarro, Director of the White House National Trade Council, attempted to ease the tariff-induced fears in a CNBC interview on Thursday, assuring viewers that the U.S. can implement tariffs “in a way that is peaceful and will improve and strengthen the trading system.”

In other political developments, the White House made some notable personnel changes this week–CIA Director Mike Pompeo replaced Rex Tillerson as Secretary of State, and longtime CNBC personality Larry Kudlow replaced Gary Cohn, as the president’s top economic advisor–and the New York Times reported on Thursday that Special Counsel Robert Mueller has subpoenaed the Trump Organization for documents, some of which relate to Russia.

Nine of eleven S&P sectors finished the week in negative territory, with materials being the weakest performer. Materials giant Monsanto dropped 4.8% on Thursday following news that its pending merger with Bayer will likely face additional hurdles from antitrust officials.

Meanwhile, the consumer staples, industrials, and financials sectors also showed particular weakness. Financials suffered amid a flattening of the yield curve, which doesn’t bode well for lenders, as they rely on the difference between what they spend on deposits and what they charge for loans. The yield on the 2-yr note climbed three basis points to 2.29%, while the benchmark 10-yr yield dropped six basis points to 2.84%, cutting the 10-2 spread to 55 bps–its lowest level since late January. On a positive note, the rate-sensitive utilities and real estate sectors finished the week in the green.

Investors received several influential economic reports during the week, including the February readings for the Consumer Price Index, the Producer Price Index, Retail Sales, Housing Starts, and Building Permits. In short, the data didn’t really give investors a reason to adjust their rate-hike expectations; it’s all but certain that the Fed will hike rates at its meeting next week, and the Fed funds futures market is still pointing towards a total of three rate hikes this year–although the chances for a fourth hike are sitting at 34.3%.

Crude oil closed Friday at $62.25 a small gain over the previous week’s close. The International Energy Agency said on Thursday that global oil demand will likely grow faster than expected this year, partly offsetting a surge in U.S. shale production and keeping the market in balance.

March 19 – March 23 Economic Calendar

  • Monday
  • Raphael Bostic Speaks
    9:00 AM ET
  • Redbook
    8:55 AM ET


  • FOMC Meeting Announcement
    2:00 PM ET
  • FOMC Forecasts
    2:00 PM ET
  • Fed Chair Press Conference
    2:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • FOMC Meeting Begins
  • Redbook
    8:55 AM ET


  • FOMC Meeting Announcement
    2:00 PM ET
  • FOMC Forecasts
    2:00 PM ET
  • Fed Chair Press Conference
    2:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM 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
  • FOMC Meeting Announcement
    2:00 PM ET
  • FOMC Forecasts
    2:00 PM ET
  • Fed Chair Press Conference
    2:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET
  • FHFA House Price Index
    9:00 AM ET
  • PMI Composite Flash
    9:45 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Raphael Bostic Speaks
    8:10 AM ET
  • Durable Goods Orders
    8:30 AM ET
  • New Home Sales
    10:00 AM ET
  • Neel Kashkari Speaks
    10:30 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Fed Chair Press Conference
    2:30 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.