-June 15, 2018 Weekly Capital Market Update. Markets were mixed this week as fed policy changes, macroeconomic and geopolitical developments continued to dominate headlines. The Federal Reserve raised interest rate +0.25%, moving the short-term rates to 2.0%; the US central bank also provided hawkish statements about perhaps two more rate hikes ahead in 2018. The S&P 500 closed +0.38%, the Down Jones -0.58% and the Nasdaq +1.46%. Fundamentally, the US is still benefiting from strong economic underpinnings. For example, small business optimism rose to its second highest level in the report’s 45-year history and retail sales surged in May. There was also some big news this week on a dividend darling with the $85 billion AT&T and Time Warner merger winning antitrust approval.
-June 8, 2018 Weekly Capital Market Update. With improved investor sentiment all major U.S. Equity Indexes rallied on the week: S&P 500 +2.76%, the Dow Jones +3.74% and the Nasdaq +2.73%. Indeed, every sector posted gains with the exception of the staid yield play of Utilities. While domestic stock strength has returned, emerging markets continue to be walloped (-4.34% week, -13.38% YTD) due to U.S. interest rates, the rising dollar and continued trade tension. The U.S. Corporate Bond Index also has a negative total return of -3.1% for the year, with the long bond’s total return being a woeful -5.4%. This bond rout is largely related to the expectation of several more rate hikes by the Federal Reserve which theoretically would reward investors to wait to invest in higher yielding securities down the road.
June 1, 2018. Monthly Stock Market Returns & Recap for the Month of May 2018: Though it was a wild ride, all major markets finished positive on the month with the S&P 500 +2.41%, Dow Jones +1.41% and Nasdaq +5.61%. There were several positive underpinnings behind the month's uptick in equities, including: 1) upwardly revised GDP growth to 3%, 2) unemployment dropping to 3.9%, 3) business outlook survey suggesting a pickup in manufacturing sector growth (ISA moved to 58.7), and 4) higher construction spending. Furthermore, corporate capital spending (capex) has increased almost +9% since the presidential election (Q4/16) as a result of pro-business policies and the need to expand capacity. Finally, some of the popular, highly-valued tech leaders recovered during the month which, in turn, boosted the S&P 500 and Nasdaq. Morgan Stanley put out a statement this week calling George Soros’ warning of a financial crisis “ridiculous”. Morgan Stanley CEO James Gorman said while some of Soros’ concerns are warranted, others are not. For instance, Gorman said about Soros’ view of the EU that “I don’t think we are facing an existential threat at all”.