Telemus Weekly Market Review

March 5 – March 9, 2018

U.S. equities were back in rally mode last week, more than reclaiming the previous week’s losses, as investors navigated their way through a host of events, including a battle over tariffs in Washington, the latest European Central Bank policy meeting, and the release of the Employment Situation Report for February. The tech-heavy Nasdaq Composite led the charge with a weekly gain of 4.17%, closing Friday at a new all-time high, while the S&P 500 and the Dow Jones Industrial Average advanced 3.54% and 3.25%, respectively.

The tariff saga continued last week as some congressional Republicans and officials within the White House urged President Trump to reconsider the duties on steel and aluminum imports that he proposed, fearing that they could cause a trade war. The president refused to back down though, leading to the resignation of his top economic advisor Gary Cohn on Tuesday.

Despite the pushback Mr. Trump signed a proclamation to implement the tariffs on Thursday afternoon, but, to the market’s delight, exempted Canada and Mexico. The president also left open the possibility of exemptions for other countries depending on their willingness to renegotiate trade deals. The tariffs will take effect on March 23.

Overseas, the European Central Bank (ECB) left its key policy rates unchanged on Thursday, as expected, and removed from its policy statement a promise to increase its bond purchases if needed. The latter move was seen as a small step towards normalization following years of ultra-accommodative policy. In addition, the ECB reaffirmed that its net asset purchases will remain at a monthly pace of 30 billion euros until the end of September 2018, or beyond, if necessary.

In Asia, North Korean leader Kim Jong Un on Thursday surprisingly extended an invitation to meet with President Trump, which Mr. Trump accepted. The summit, which will reportedly take place by the end of May, would mark the first face-to-face meeting between a sitting U.S. president and a sitting North Korean leader.

The Employment Situation Report for February was released on Friday morning, showing robust job growth and a deceleration in the year-over-year change in average hourly earnings. Nonfarm payrolls increased by 313,000, while average hourly earnings increased 0.2%, as expected, and the unemployment rate stayed at 4.1%. The report helped Wall Street close out the week on a positive note, boosting the major averages more than 1.5% apiece on Friday.

11 of 11 S&P sectors finished with weekly gains. Economically-sensitive groups like financials, technology, industrials, and materials were the top-performing sectors, while countercyclical sectors like consumer staples, utilities, and telecom services showed relative weakness.

Following the week’s rally, the S&P 500 is now only 3.0% below its record high of 2873, which is a big improvement from down 10.1% at the bottom of the February sell-off.

U.S. government bond prices declined Friday after a better than expected jobs report signaled the economic outlook remains strong. The yield on the benchmark 10-year Treasury note closed Friday at 2.894%, up slightly from the previous week’s close.

Oil prices gained on Friday, lifted by positive economic data, rising stocks and declining U.S. production. Light, sweet crude for April delivery advanced $1.92, or 3.2%, to $62.04 a barrel on the New York Mercantile Exchange, its biggest one-day percentage gain since July.

March 12 – March 16 Economic Calendar

  • Monday
  • Treasury Budget
    2:00 PM ET
  • Consumer Price Index
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Business Inventories
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • NFIB Small Business Optimism Index
    6:00 AM ET
  • Consumer Price Index
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Business Inventories
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • EIA Natural Gas Report
    10:30 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
  • PPI-FD
    8:30 AM ET
  • Retail Sales
    8:30 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • Business Inventories
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Treasury International Capital
    4:00 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
  • Empire State Mfg Survey
    8:30 AM ET

  • Import and Export Prices
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Housing Market Index
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Housing Starts
    8:30 AM ET

  • Industrial Production
    9:15 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • JOLTS
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • EIA Natural Gas Report
    10:30 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.