Telemus Weekly Market Review

September 24 – September 28, 2018

The S&P 500 backed off from its record highs last week, losing 0.54%, and the Dow also lost ground, falling 1.07%. The tech-heavy Nasdaq was the sole winner, rallying 0.74%, as investors digested a flurry of political headlines and the latest policy statement from the Federal Reserve.

The week began with the U.S. implementing tariffs on $200 billion worth of Chinese goods, which triggered Beijing to impose retaliatory tariffs on $60 billion worth of American products. Chinese officials also canceled mid-level trade talks that had been scheduled for later in the week, dashing hopes for a near-term resolution.

Oil was in focus on Monday after OPEC and several non-OPEC nations ended a weekend meeting without an agreement to increase output in order to counter falling supply from Iran due to U.S. sanctions. President Trump criticized OPEC in front of the UN General Assembly on Tuesday, saying the oil cartel is “ripping off the rest of the world” by colluding to limit supply and prop up prices.

On Wednesday the Federal Reserve increased short-term interest rates as the markets expected raising the fed funds target range by 25 basis points to 2.00-2.25%. In its policy statement, the Fed removed the word ‘accommodative’, which led some to believe that officials could be moving towards slowing monetary tightening. However, Fed Chairman Jerome Powell said during his post-decision press conference that the language change didn’t signal a change in the Fed’s path for rate hikes.

As for rate-hike projections, the Fed still appears to be on track to raise rates another 25 basis points in December, with the CME FedWatch Tool putting the chances at 75.8%. Beyond 2018, the Fed’s dot plot showed expectations for three rate hikes in 2019 and one in 2020. The 10 year U.S. Treasury note ended the week and 3rd quarter at 3.06%. The 10-year yield, which helps set borrowing costs for consumers and companies, notched its fifth consecutive quarterly climb, its longest such streak since 2013.

On Capitol Hill, some real political drama unfolded on Thursday as Supreme Court nominee Brett Kavanaugh and his accuser, Christine Ford, who has accused Mr. Kavanaugh of sexually assaulting her back in high school, testified in a grueling session before the Senate Judiciary Committee and a national TV audience. The Committee advanced Mr. Kavanaugh’s nomination on Friday, but a final Senate vote will be delayed for a one week FBI investigation.

Over in Europe, two populist parties governing Italy widened the country’s budget-deficit target for next year to 2.4% of GDP on Friday, likely putting the country at odds with the European Union. The major European stock indices sold off in reaction to the news, with Italy’s MIB leading the retreat.

In U.S. corporate news Comcast paid $40 billion to win a bid for European broadcaster Sky ending a protracted battle with 21st Century Fox. Nike reported above-consensus earnings for its fiscal first quarter. Facebook fell on Friday after disclosing another “security issue” this time impacting 50 million users.

However, perhaps the week’s biggest corporate story revolved around Tesla’s embattled CEO, Elon Musk, who was sued by the SEC on Thursday evening over his tweets about taking the electric carmaker private.

As for the sector standings, they were pretty mixed. Materials were the worst performer, down 4.5%, and the heavily-weighted financials sector was the second-worst performer, losing 4.1%. The newly-added communications services sector was the top performer with a weekly gain of 1.1%.

October 1 – October 5 Economic Calendar

  • Monday
  • Raphael Bostic Speaks
    8:30 AM ET
  • PMI Manufacturing Index
    9:45 AM ET
  • ISM Mfg Index
    10:00 AM ET
  • Construction Spending
    10:00 AM ET
  • Neel Kashkari Speaks
    11:00 AM ET
  • Eric Rosengren Speaks
    12:15 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Patrick Harker Speaks
    12:00 PM ET
  • Loretta Mester Speaks
    2:15 PM ET
  • Tuesday
  • Redbook
    8:55 AM ET

  • Randal Quarles Speaks
    10:00 AM ET
  • Jerome Powell Speaks
    12:00 PM ET
  • Construction Spending
    10:00 AM ET
  • Neel Kashkari Speaks
    11:00 AM ET
  • Eric Rosengren Speaks
    12:15 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Patrick Harker Speaks
    12:00 PM ET
  • Loretta Mester Speaks
    2:15 PM ET
  • Wednesday
  • Charles Evans Speaks
    6:30 AM ET
  • MBA Mortgage Applications
    7:00 AM ET
  • Tom Barkin Speaks
    8:05 AM ET
  • ADP Employment Report
    8:15 AM ET
  • PMI Services Index
    9:45 AM ET
  • ISM Non-Mfg Index
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Patrick Harker Speaks
    12:00 PM ET
  • Loretta Mester Speaks
    2:15 PM ET
  • Thursday
  • Challenger Job-Cut Report
    7:30 AM ET
  • Jobless Claims
    8:30 AM ET
  • Factory Orders
    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
  • EIA Petroleum Status Report
    10:30 AM ET
  • Patrick Harker Speaks
    12:00 PM ET
  • Loretta Mester Speaks
    2:15 PM ET
  • Friday
  • Employment Situation
    8:30 AM ET

  • International Trade
    8:30 AM ET
  • Raphael Bostic Speaks
    12:30 PM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Consumer Credit
    3:00 PM ET
  • Eric Rosengren Speaks
    12:15 PM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Patrick Harker Speaks
    12:00 PM ET
  • Loretta Mester Speaks
    2:15 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.