Monthly Archives

July 2017

July 31, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Stocks were little changed last week as investors followed two major headlines. First was the FOMC meeting where the Federal Reserve held rates unchanged, as many had expected, leaving the funds target range set at 1.00 to 1.25 percent. As part of the Fed announcement, investors were hoping for “hints” on when the Fed would start unwinding its $4.5 trillion balance sheet. However, the most they got was “relatively soon,” which some are interpreting to mean either September or December. The reason why this matters to bond investors is that the removal of dollars form the bond market would mean a cut in demand for bonds which could begin to move interest rates higher. Second, was the Senate vote to repeal and replace Obamacare which so far has failed to pass. Healthcare stocks declined slightly into the vote and continued lower the remainder of the week, as investors cast their doubts on congress’ ability to fix the current problems in healthcare.

As we begin the month of August, we don’t expect much from Wall Street. Like most Americans Wall Street’s employees are still trying to get their last few days of vacation in before school starts, which typically results in lower trading volume this time of year. Of course, there are still several large companies yet to release their earnings in the coming week, and we certainly don’t want to count out their ability to give the market a boost.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

HOUSEHOLDS ARE FEELING OPTIMISTIC

Unemployment is at a 16-year low, and the Conference Board’s consumer confidence index is near a 16-year high. It reached 121.1 in July, rising 3.8 points; analysts polled by MarketWatch expected a reading of 116.9. The University of Michigan’s consumer sentiment index rose to 93.4.1,2

HAVE HOME SALES REACHED A PLATEAU?

Last week, the National Association of Realtors announced a 1.8% June retreat for existing home sales. New home buying only advanced 0.8% for June by Census Bureau calculations. Analysts point to tight supply limiting resales and a scarcity of affordably priced new developments discouraging new home shoppers.3

GROWTH PICKED UP IN THE SECOND QUARTER

According to the Bureau of Economic Analysis, the economy expanded at an annual rate of 2.6% in Q2, with the yearly personal spending rate at 2.8%. As it presented its Q2 estimate, the BEA also revised Q1 consumer spending up from 1.1% to 1.9%.2

THE DOW LEADS THE WAY ON WALL STREET

Ascending 1.16% in five days, the Dow Industrials closed at 21,830.24 Friday. In contrast, both the S&P 500 and Nasdaq Composite staged minor weekly retreats. The S&P declined 0.02% to 2,472.08; the Nasdaq, 0.20% to 6,374.68.4

THIS WEEK

On Monday, NAR releases its June pending home sales index, and CNA Financial, Loews Corp., Pandora Media, and Papa John’s announce earnings. Tuesday offers earnings from Allstate, Apple, Archer Daniels Midland, Beazer Homes, Big 5 Sporting Goods, Cummins, Denny’s, Extended Stay America, HanesBrands, Herbalife, Pfizer, Phillips 66, Pitney Bowes, Sprint, Under Armour, Unisys, and Xerox, plus June consumer spending figures and ISM’s July factory PMI. A new ADP payrolls report appears Wednesday, along with earnings news from AmeriGas, AutoNation, Choice Hotels, Container Store, Cumulus Media, Energizer Holdings, Exelon, Fitbit, Garmin, Groupon, Humana, Icahn Enterprises, Marathon Oil, Square, Symantec, Take Two Interactive, Tesla, Time Warner, Transocean, and Vulcan Materials. On Thursday, investors review earnings from AMC Networks, Activision Blizzard, Aetna, Allergan, Avon, Berkshire Hathaway, Callaway Golf, Chesapeake Energy, Duke Energy, Fluor, GoPro, Hyatt, iHeartMedia, Kellogg, Kraft Heinz, Motorola, Noble Energy, Parker-Hannifin, RE/MAX Holdings, Shake Shack, TiVo, Viacom, Western Union, Wingstop, Wyndham Worldwide, Yelp, and Yum! Brands, plus new initial claims numbers and ISM’s July services PMI. The Department of Labor’s latest jobs report arrives Friday, along with earnings from Cigna, ITT, Revlon, and Sempra Energy.

July 24, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

By now you may have received your quarterly statement and noticed our new quarterly reports. We hope you find our new reports more informative and easier to read. Due to the new format, some clients have asked whether there has been a change to our billing procedures. We wanted to let you know that there are no changes to our procedures, and we will include a short sentence in future quarterly reports for more clarity.

The stock market maintained its resiliency over the past week, as corporate earnings continued to roll out with generally better than expected results. Though large cap growth companies have reasserted their dominance over the past week, they no longer appear to be singing a solo, as they were just a few weeks ago. Recently, large cap growth stocks have been joined by a chorus of other areas of the stock market that have been making new highs, that includes smaller companies. This is a good sign for the stock market in the short term, but we are not yet out of the woods.

On Wednesday of this week, the FOMC will consider whether to raise short term interest rates. The majority of analysts do not expect the Fed will raise interest rates at this time, though, further hikes are expected later this year. This lack of concern for rising interest rates can be seen in the bond market where rates remained in the same range they have been in over the past six years. Increasing employee wages are believed to be one of the leading indicators of rising inflation, but so far this has not materialized.

Though we are currently in the summer months when many on Wall Street are on vacation, and stock prices usually drift sideways, we are encouraged by both the corporate earnings results, so far this season, along with investor’s buying the dips.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

WILL STOCKS GET AN EARNINGS BOOST?

While the first full week of the Q2 earnings season saw no pronounced rallies, there were also no shocks. By Friday’s closing bell, 20% of S&P 500 member firms had reported calendar Q2 results, and a FactSet analysis showed 77% had topped sales projections and 73% had beaten earnings-per-share forecasts – a good sign in an earnings-driven market climate. The Nasdaq Composite gained 1.19% last week and settled at 6,387.75 Friday; the S&P 500 rose to 2,472.54 after a 5-day gain of 0.54%. As blue chips fell 0.27% across five trading days, the Dow Jones Industrial Average closed at 21,580.07 Friday. All three indices hit record highs during the week.1,2

CONSTRUCTION ACTIVITY SURGED IN JUNE

According to a new Census Bureau report, housing starts rose 8.3% last month, while building permits were up 7.4%. That counteracts the 2.8% fall for starts and the 4.9% drop for permits in May.3

GOLD TOPS $1,250

Settling at $1,254.90 Friday, the yellow metal hit its highest COMEX close since June 23, up 2.2% in five days. Silver rose 3.3% last week to a Friday close of $16.46.4

THIS WEEK

On Monday, Alphabet, Anadarko Petroleum, Celanese, Halliburton, Hasbro, and Stanley Black & Decker present earnings, and Wall Street also considers June existing home sales numbers. Tuesday offers a new Conference Board consumer confidence index and earnings from 3M, AT&T, Ameriprise Financial, Amgen, Biogen, Caterpillar, Chipotle, Chubb, Domino’s, Eli Lilly, Express Scripts, Freeport-McMoRan, General Motors, JetBlue, McDonald’s, Mondelez, PulteGroup, Quest Diagnostics, Smart & Final, Supervalu, Texas Instruments, U.S. Steel, and Universal Health. The Federal Reserve makes a policy statement Wednesday; investors will also look at June new home sales data and earnings from Anthem, Boeing, Coca-Cola, Corning, D.R. Horton, Discover, Facebook, Ford Motor Co., General Dynamics, Gilead Sciences, Hilton Worldwide, Ingersoll-Rand, O’Reilly, PayPal, Public Storage, Rent-A-Center, Rockwell Automation, Ryder System, State Street, Waste Management, West Marine, Whirlpool, and Whole Foods. Data on initial claims and June hard goods orders appears Thursday, plus earnings from Aflac, Ally Financial, Altria Group, Amazon, Baidu, Bristol-Myers Squibb, ConocoPhillips, Dow Chemical, Dr. Pepper Snapple, Dunkin’ Brands, Edison International, Expedia, Intel, Procter & Gamble, Raytheon, Revlon, Southwest Airlines, Spirit Airlines, Starbucks, Twitter, UPS, Valero Energy, Verizon, W.R. Grace, and Xerox. July’s final University of Michigan consumer sentiment index and the first Q2 GDP estimate appear Friday, plus earnings from American Airlines, Chevron, ExxonMobil, Magellan Health, and Merck.

July 17, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Investors were in a good mood last week as the bulls wrestled back control of the stock market, lifting some of the major market averages to new closing highs. For the first time in a few weeks, a broad-based advance has continued over more than a couple of days, opening the door for small-cap stocks to reassert a leadership role. Historically, the stock market performs best when small companies are leading, something we haven’t seen since January of this year.

This past week, Federal Reserve President, Janet Yellen, gave her semiannual monetary policy statement before the House Financial Services Committee. There were no major policy revelations, with her testimony comprised primarily of direction from recent FOMC statements. This included how rate hikes would continue at a gradual pace over the coming years, and that tapering of the Fed’s balance sheet will begin sometime this year. She also commented on inflation being held down by unexpected factors to include cell phones, drugs, and gasoline. The Fed believes that eventually inflation will rise, due to our current high level of employment. She also noted that the global economy has improved.

This week 70 of the S&P 500’s largest companies will disclose their earnings for the second quarter. Not only will this give investors a glimpse at each corporation’s individual profits, but will begin to paint a broader picture of the strength of the U.S. economy. With Washington focused on healthcare reform the next couple of weeks, Wall Street will be focused on earnings.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

INFLATION PRESSURE WEAKENS

The Consumer Price Index was unchanged in June, according to the Bureau of Labor Statistics. That left its yearly advance at only 1.6%, nearly half a point below the Federal Reserve’s target (the core CPI was up 1.7%). After the announcement, some economists and market strategists wondered whether the Fed would rethink its plans for a third interest rate hike in 2017. The Producer Price Index rose 0.1% in June, leaving its yearly increase at 2.0%.1,2

RETAIL SALES, CONSUMER SENTIMENT INDEX DECLINE

For the second month in a row, households scaled back their retail purchases – retail sales were down 0.2% in June following a 0.1% May decline. Core sales fell 0.2% after a May retreat of 0.3%. The University of Michigan’s preliminary July consumer sentiment index lost 2.0 points off its final June mark to a reading of 93.1.1,2

OIL RALLIES

A projection of rising demand and news of a pipeline shutdown in Nigeria sent the price of light sweet crude 5.2% higher in a week. WTI crude settled at $46.54 on the NYMEX Friday, its best close since July 3.3

DOW ENTERS RECORD TERRITORY AGAIN

Friday, the Dow 30 notched its third straight record close: 21,637.74. At the same time, the S&P 500 also settled at a new record of 2,459.27. The Nasdaq Composite finished Friday’s market day at 6,312.47, a half-percent away from its all-time peak. For the week, the Dow rose 1.04%; the S&P, 1.41%; the Nasdaq, 2.59%.4,5

THIS WEEK

Monday’s earnings parade includes announcements from BlackRock, Charles Schwab, J.B. Hunt, and Netflix. On Tuesday, Wall Street examines earnings from Bank of America, CSX, Comerica, Goldman Sachs, Harley-Davidson, IBM, Johnson & Johnson, Lockheed Martin, TD Ameritrade, and UnitedHealth Group. Wednesday sees data on June housing starts and building permits, plus earnings from American Express, Fidelity National Financial, Morgan Stanley, Northern Trust, Qualcomm, T-Mobile, U.S. Bancorp, United Rentals, and W.W. Grainger. A new weekly initial claims report arrives Thursday, plus earnings news from Abbott Labs, Alliance Data Systems, American Airlines Group, BB&T, BoNY Mellon, Capital One, Cintas, eBay, E*TRADE, GATX, KeyCorp, Microsoft, NCR, Nucor, Philip Morris, Sherwin-Williams, Skechers, Snap-On, Travelers Companies, Union Pacific, Visa, and Whirlpool. On Friday, Colgate-Palmolive, Fifth Third Bancorp, General Electric, Honeywell International, Regions Financial, Schlumberger, and SunTrust Banks present earnings.

July 10, 2017 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

This past week investors appeared to be suffering either from a post 4th of July holiday hangover or the beginning of the summer doldrums, with U.S. stocks little changed over the shortened trading week. However, even with just three and a half days of trading, there was plenty of economic data for investors to digest.

Some of the positive economic reports for June included manufacturing and employment. For the month of June, the ISM manufacturing report leaped almost 3 points to 57.8, the strongest report since August 2014. Any reading of 50 or above indicates an expansion in the economy. Some of the highlights of the report included strong readings in new orders, production and backlog orders. The recent acceleration in this report, and others, points to a potential surge in the manufacturing sector in the second half of the year. So far, evidence of a surge has yet to show up in government data.

For the month of June non-farm payrolls rose by 222,000 jobs, well above expectations, while Mays’ payroll report was revised higher by 14,000 jobs to 152,000. Though the growth in jobs is positive for the economy, it is not having the desired effect on wages which have only risen a mere 2.5 percent over the past twelve months. This means that the job growth over the past year has been primarily low wage, low productivity jobs. Higher wages are necessary to boost inflation, which at the moment has yet to improve much.

Beginning this week, investors will be focusing on second quarter earnings reports. So far this year, technology stocks have lead the major market averages higher. Of note, in recent weeks investors have begun taking some of their profits in the technology sector off the table, possibly concerned that some technology shares have come too far too fast. This rotation in the market may provide an opportunity for the healthcare sector to take the lead over the next six months, particularly if Congress can agree upon a health care reform bill.

Sincerely,
Laif Meidell, CMT

We hope you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

HIRING PICKS UP AGAIN

The Department of Labor announced some good news Friday: the creation of 222,000 net new jobs in June, the largest hiring gain in four months. Approximately 4.7 million people reentered the labor force and found work in June, a peak unmatched in 27 years of monthly data. Wages rose 0.2% for an annualized gain of 2.5%. The main unemployment rate ticked north to 4.4% as more Americans joined the job hunt; the U-6 rate, including the underemployed, increased 0.2% to 8.6%, its first rise since January.1

ISM FACTORY PMI HITS 3-YEAR PEAK

In June, the Institute for Supply Management’s globally watched manufacturing purchasing manager index improved 2.9 points to 57.8, its highest reading since August 2014. ISM’s non-manufacturing PMI rose to 57.4 after a half-point gain; its June reading signaled the 90th straight month of expansion for the country’s service sector.2,3

GOLD SETTLES AT ITS LOWEST PRICE SINCE MARCH

The yellow metal fell to a COMEX close of $1,209.70 Friday. It is now on a 5-week losing streak. The price of gold sank 2.6% last week, while the price of silver dropped 6.9%; silver ended the week down at $15.43.4

MAJOR INDICES MAKE SMALL WEEKLY GAINS

Across a stretch of choppy trading days, the S&P 500 added just 0.07% to close at 2,425.18 Friday. The Nasdaq Composite and Dow Jones Industrial Average posted respective, 5-day advances of 0.21% and 0.30%. The Nasdaq wrapped up Friday’s market day at 6,153.08; the Dow, at 21,414.34.5

THIS WEEK

Monday, Barracuda Networks and WD-40 present earnings. On Tuesday, earnings appear from PepsiCo and Yum! Brands.Wednesday, Federal Reserve chair Janet Yellen visits Capitol Hill to begin two days of testimony on monetary policy in Congress; in addition, the Fed releases a new Beige Book, and Fastenal reports Q2 results. Thursday, Wall Street considers a new initial jobless claims report, plus the June Producer Price Index. On Friday, a river of data arrives: a new earnings season begins with announcements from Citigroup, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo, complementing the initial July University of Michigan consumer sentiment index, the June Consumer Price Index, and June retail sales and industrial production reports.