Weekly Market Update
August 14, 2017
Presented By:  Todd Day, Portfolio Manager


Are Dark Clouds Gathering for This 
Bull Market?

The Dow, S&P 500, NASDAQ and Russell 2000 had their worst week of the year last week and it had nothing to do with economics, earnings or central banks.  The weakness was all about the saber rattling coming out of North Korea and the continued threats from their leader.  But what really had investors voting with their feet was the return volley of rhetoric coming from President Trump (fire & fury, locked & loaded), and that sent global markets down. 

A note to my readers:  In the monthly market update, I did not mention the geopolitical landscape and what could possibly happen, but from this point forward, until otherwise indicated, geopolitical clouds will hang over the markets.  


Earning season is winding down; more than 400 companies currently residing within the S&P 500 have now reported results for the second quarter, and so far it has gone rather well. Of those 400 plus companies, 72% have beaten EPS (Earnings per share) expectations to the upside.   Earnings growth is now running at a hot 11.6% year over year, which itself is ahead of expectations. Revenue?  Glad you asked. Revenues are fairly hot as well, up 5.2% on a year-over-year basis.

You may remember my reporting of Amazon's earnings, which were concerning to investors, well, get this - Amazon, hired 50,000 people two weeks ago, IN ONE DAY.  That comes at a hughe expense but imagine how that will be reflected in the August jobs data.


So far in August, economic data has appeared to be improving, mostly in the labor market. 

Last week, we got the latest read from the National Federation of Independent Business, and the optimism index rose 1.6 points in July to 105.2, as significant gains in hiring activity pushed the reading to the highest level since February and just short of the 12-year high set in January.  The weakest component was capital expenditures, which still remains the 3rd highest component of the 10 that make up the index.  What this tells me is that Main Street must be feeling pretty good - business and profits - and they are resolved to the fact that not much is coming out of DC, but boy if they get anything, healthcare reform, tax reform, deregulation - then that's just gravy....who is that going to benefit, small and medium size companies domestically.  The large companies that do business overseas, they are still going to do just fine.   

The latest jobs report showed we added  209,000  in July, the unemployment rate changed little at 4.3% and there are more than 6 million job openings in June in the U.S., a record high.  One thing concerning from the latest jobs report is that one in three new jobs added last month were in the leisure and entertainment sector.

On the inflation front, the producer price index fell last month which was the biggest decline in 11 months and on the consumer side, the CPI only rose .1% and 1.7% year - over - year.  There is no inflation.... Following these reports, rate hike odds for December fell back below 40% .  The FED is going to be perplexed by the lack of inflation, so, they should not be in a hurry to raise rates, at this time. 


Tensions between North Korea and the entire civilized world had stocks around the globe under pressure.  The Stoxx Europe 600 had its worst week since November, just before U.S. presidential election.


Traders and investors went into the weekend uncertain what might transpire, but there was no saber rattling and the risk-on trade is back in motion, pushing the major averages higher.  Investors are hitting the buy button as it appears the clouds of uncertainty have lifted, but, remember this, there's just as much "uncertainty" today as last month, last quarter, last year, tomorrow, next month, next quarter and next year...just saying.

This week, corporate earnings will still be trickling in, so we will be watching if the better than expected reports keep coming in. 

On the economic front, retail sales, housing starts, industrial production and consumer sentiment will highlight the calendar.  Those retail sales figures have been really poor; I'll be watching those closely.  I will also be watching those consumer sentiment numbers to see if the consumer is still feeling good.

We will get the latest minutes from the FED's July meeting, which you'll recall, there was no press conference following that meeting, so analysts are anxiously awaiting these minutes.   

But, make no mistake, even though geopolitical tensions may have subsided over the weekend, it will be A#1 on the wall of worry, s o stay tuned and we'll keep you posted....

"A thankful heart is not only the greatest virtue,
but the parent of all the other virtues."

- Cicero

Swordfish Kebab With Mint Pesto


      • 1/4 cup almonds, sliced
      • 1 large garlic clove, smashed
      • 1 cup fresh mint leaves, packed
      • 1/4 cup parsley leaves, packed
      • 1 TBSP lemon zest, grated (from 1 lemon)
      • 5 TBSP extra virgin olive oil
      • Pinch crushed red pepper (optional)
      • 1-1/2 pounds swordfish thick-cut steaks, cut further into 1-1/2" cubes
      • 1/2 tsp salt
      • 1/4 tsp black pepper, ground

If using bamboo skewers, prep them by soaking skewers in warm water for at least 30 minutes.

1. Create Pesto

*   Process almonds and garlic in food processor until finely chopped.

*   Toss into processed mixture the lemon zest, mint, and parsley. Process until ground finely.

*   Move mixture to medium bowl, and add olive oil, salt, black pepper, and crushed red pepper (optional).

2. Marinade Fish

*   Toss swordfish with 1/3 of the pesto until fully covered.

*   Marinate fish in refrigerator 30 minutes to 4 hours.

3. Grill

*   Preheat grill to medium-high heat.

*   Place up to 3 pieces of swordfish onto each skewer.

*   Put skewers on grill and cook for 2 to 3 minutes on each side, or until fish cooks all the way through.

*   Top fish with remaining pesto.


Recipe adapted from Good Housekeeping


Protect Your EFIN From Fraud
Preventing identify theft and protecting accounts filed with the IRS is a year-round responsibility for taxpayers. Thieves commonly break into tax professionals online accounts to steal taxpayers' Electronic Filing Identification Number (EFIN). Fortunately, you can take steps to manage your account and monitor suspicious activity throughout the year.
To check your EFIN records:
1. Register for the IRS e-services.
If you've not yet registered with IRS e-services, then you'll need to first do so before checking your EFIN records. You can create an account through the IRS website .
2. Check the EFIN records associated with your account.
Log in to your e-services account. From there, you can opt to view your "EFIN Status," which updates weekly and lists the number of tax returns associated with your account.
3. Report suspicious activity.
Promptly contact the IRS if you see discrepancies between your listed file returns and your personal records. You can report your concern by calling the IRS e-Help Desk at 866-255-0654.
Other details may apply, and you can find more information on the IRS website .
 * This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Tip courtesy of IRS.gov

Avoid Chunking Your Chip
Chunking your chip most often happens when golfers try to avoid swinging their club too hard. They stand too far away from the ball, take a full swing, and try to slow the impact at the last moment. The result: a chunked chip. Try moving closer to the ball, making your shaft vertical so the club head is on its toe.
If you find yourself chunking the ball, follow these steps to improve your stance and swing.
Step 1:   Stand directly across from the ball, about 10 inches away. You'll want to step in with your back foot.
Step 2:   Identify your target and aim your clubface directly at it.
Step 3:  Settle your weight forward by stepping in with your front foot; keep your weight shifted as such throughout your swing.
Step 4:   Make sure you lean the shaft slightly toward the target. From there, brush back and through.
Tip courtesy of Golf Digest

Control Bruising With Self-Care
Bruises result from when blood vessels break and leak into tissues near the surface of your skin. The often black-and-blue bruise will stay visible and change colors until it fully heals. Here are some ways that you can care for any bruises once they happen.

*  Elevation: Be sure to lift up the part of your body with bruising.

*  Ice Packs: Hold either ice packs wrapped in a cloth or a towel soaked in cold water on the bruise for up to 10 minutes. Repeat multiple times a day, up to one or two days after the injury an as needed.

* Time to Rest: Make sure you rest the injured body part and minimize movement.

* Reduce Pain and Swelling: Find relief from pain by taking either aspirin or ibuprofen.

If the injury subsists after 3 days without lessening, you may need deeper treatment. Consult your doctor if the pain continues or if you have a history of internal bleeding or other symptoms emerge, such as nose bleeds.
Tip courtesy of Mayo Clinic

Alternative Ways to Use Baking Soda

The baking soda you store in your cabinets is more helpful than you may think. As a chemical compound, sodium bicarbonate is a great PH neutralizer and bufferer, making it helpful for a variety of home and personal care needs. As many beauty and cleaning products can contain harmful chemicals, swapping some of these items with baking soda can help you minimize the toxins in your home. Here are some easy ways to use baking soda beyond baking.

*   Mouth Freshener: When combined with water, you can create a mouth rinse that will both freshen your mouth and neutralize any odors (rather than just cover them up). To do so, mix one teaspoon of baking soda with a half-glass of water. Swish some in your mouth, spit it out, and rinse.


*   Antacid: You can use baking soda to settle heartburn, acid indigestion, and an upset stomach. To do so, follow the instructions listed on the baking soda package.


*   Silver Polish: Mixing 3-parts baking soda with 1 part water will create a great polish for your silver. Rub the mixture onto the silver with a clean sponge or cloth, rinse, and dry.


*   Garbage Disposal Deodorizer: You can freshen your garbage disposal and neutralize odors by sprinkling baking soda down the drain and running warm tap water.

Tip courtesy of Care2.com

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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.


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The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.


The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.


The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.


The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.


The Housing Market Index (HMI) is a weighted average of separate diffusion indices based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. Each resulting index is then seasonally adjusted and weighted to produce the HMI.


The Pending Home Sales Index, a leading indicator of housing activity,  measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos and co-ops.  The PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years. The results are weighted to produce the index.


The Chicago Board Options Exchange Market Volatility Index (VIX) is a weighted measure of the implied S&P 500 volatility. VIX is quoted in percentage points and translates, roughly, to the expected movement in the S&P 500 index over the upcoming 30-day period, which is then annualized.


The BLS Consumer Price Indexes (CPI) produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Survey responses are seasonally adjusted and weighted to produce a composite index.


The Conference Board Leading Economic Index (LEI) is a composite economic index formed by averages of several individual leading economic indicators, which are weighted to produce the complete index.


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