Weekly Market Update
August 21, 2017
Presented By:  Todd Day, Portfolio Manager


Risk Happens Fast!

Stocks came under pressure last week amid more DC drama, geopolitical events, a mixed earnings week and mixed economic data.  Who said that August was a slow news month? 

The NASDAQ has now fallen 4 weeks in a row and the S&P 500 and the Dow have been lower for 2 weeks and all of August's gains have been wiped out.  


Last week we heard from a number of retailers and while most disappointed, there were actually a couple of positive surprises. 

Coach and Dick's Sporting Goods reported bad earnings, but Urban Outfitters and Target surprised with better than expected earnings and revenue.  Home Depot hits largest ever sales numbers.  They raised forecasts for the second time this year, but the stock traded down in sympathy for the entire sector. 


As I said, we got a mixed bag of results on the economic front. 

Firstly, we got the release of the July FOMC FED minutes and bottom line - they aren't going anywhere (rates).  Some FOMC members wanted to begin balance-sheet unwinding at the last meeting in July but were outnumbered by those wanting to push the debate to the upcoming meeting in September. The stumbling block is the lack of inflation.  The core of FOMC members only cares about CPI/PCE right now; and we aren't going to get any hikes until they pick up.

The headline release last week had to be the closely watched retail sales figures, which came in double expectations.  Not only were those numbers good, but June was revised higher as well.  The consumer, based on these reports is back in the stores, but it doesn't match the earnings picture that many are painting, i.e., Dick's CEO mention "panic" several times in his conference call.  Non-store retailers, vehicle dealers, building materials stores lead the report. 

One the weakest of all the consumer readings, retail sales are now back into the fold with other indications on consumer spending, which are positive and in line with full employment.  Note that the upward revisions to June and May will be positives for second-quarter GDP revisions.

The Federal Reserve inadvertently released what is a weak July industrial production report about a 1/2 hour last week, with manufacturing output showing outright contraction, at minus 0.1 percent vs Econoday's consensus for a 0.2 percent gain.  Capacity utilization hit expectations at 76.7 percent.

A 3rd straight decline in motor vehicles, down 3.6 percent in July, held down the month's production.

Empire State Manufacturing survey came in at more than double expectations while the Philly FED index also remained strong. 

Another positive was the index of leading economic indicators.  Low short-term interest rates and high consumer expectations continue to underpin the index of leading economic indicators which rose 0.3 percent in July following June's very strong 0.6 percent gain.  Strength in the ISM's private survey of manufacturers also continues to be a major plus.

If the consumer is worried, it isn't showing up in the University of Michigan's consumer sentiment survey.  Consumer confidence rose in the first half of August to its highest level since January.

But there were the housing figures which disappointed.  Both housing starts and permits came in below expectations, yet, home builder sentiment remains strong. 


Across the ponds, Europe and Asia were modestly lower as the same symptoms that impacted our markets, impacted theirs as well.  The Nikkei index (Japan) hit a 3-month low. 

The bright spot for the Euro region was the fact that the Euro-area growth data show more nations joining in on the recovery.


So much for the summer doldrums for the markets, as investors brace for whatever may transpire this week and we won't have to wait long because the President is planning on laying out his plan for Afghanistan tonight and this will surely be a debated topic, taking the attention away from other distractions that have plagued the administration.  The earnings picture will be much quieter this week as we are nearly through the season.

On the economic front, we will get new/existing home sales.  We will also get the durable goods number and the Flash PMI figures later in the week. 

There will be a lot of attention to the annual symposium being held in Jackson Hole, Wyoming as the "who's-who of global finance come together, to "solve the world's problems". FED Chair Yellen will address the symposium on Friday, where she is likely to say nothing new, but we will be watching what Mario Draghi, head of ECB, has to say about their monetary policy. 

So, it will be a busy week, so stay tuned and we'll keep you posted.   

"Courage is not simply one of the virtues,
but the form of every virtue at the testing point."

C.S. Lewis
Slow-Cooked Teriyaki Ribs

      • 1 large rack baby back ribs (2 1/2 pounds), sliced into two chunks
      • 1/2 teaspoon black pepper
      • 2/3 cup teriyaki sauce
      • 1 tablespoon balsamic vinegar
      • 2 cloves garlic, pressed
      • Coleslaw
      • Sesame seeds


1.  Sprinkle pepper all over ribs.


2.  Pour 1/3 cup of teriyaki sauce into the slow cooker, and add ribs.

3.  Cover ribs with lid and cook on high for 4 hours (7 hours if cooking on low) or until tender.


4.  Cut ribs into pieces, once cooked.


5.  Simmer rest of teriyaki sauce, balsamic vinegar, and garlic in saucepan over medium-high heat, uncovered. Cook for 5 minutes.


6.  Brush sauce onto ribs.


7.  Serve by garnishing ribs with sesame seeds and with adding a side of coleslaw.




Recipe adapted from Good Housekeeping 
How to Deduct Losses From a Disaster
When a natural disaster damages taxpayers' homes or personal properties, they can typically deduct expenses on their federal tax return. And if the taxpayer lives in a federal-disaster-designated location, he or she may be able to reclaim losses more quickly.
Here are some tips for deducting losses from a disaster:
  • Deduct for Correct Year: You will need to claim your deduction for the tax year you experienced damages from a natural disaster. You can also deduct from an original or amended tax return for the immediately prior year.
  • Make an Insurance Claim: In order to deduct your losses, you will need to file a timely claim with your insurance provider. If you do not file your claim or have insurance coverage to do so, you will not be able to deduct the loss from your tax return.
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

Correct Your Shank to Improve Your Swing

Shanking your ball is the bane of golfers everywhere, no matter their skill level. This detrimental miss results from pushing the club forward and away from your body when you swing by 1/2 to 3/4 inches. Fortunately, small corrections can help you make huge gains. Follow these tips to correct your shank:

Tip 1: Head Cover
  • Place your head cover about an inch outside of the ball.
  • Swing your club with one goal: Do not hit the head cover.
This move encourages you to draw from your natural instincts. As you swing, allow your arms and legs to do what they need in order to avoid hitting the head cover.

Tip 2: 2x4 Wood

If you still found yourself shanking the ball after trying the head-cover tip, you can adapt the exercise by swapping the head cover with a 2x4 piece of wood. 

Follow the exact same steps as Tip 1
Once you swing, be sure to avoid hitting the wood. This exercise will encourage the Pavlov Effect: Your body should eventually learn the swing you need in order to not hit the wood.

Tip courtesy of Randy Chang | Golf Tips Magazine

Avoid Dehydration

With summer in full swing, becoming dehydrated can happen easily. Every day activities like gardening and running errands can exhaust you when out in the sun and humidity. To help you avoid dehydration, you can take some preventative steps. Here are some tips to keep in mind:
  • Drink water during exercise:
    Rather than drink water only before or after you engage in physical activity, stay hydrated during exercise by drinking water every 15 to 20 minutes.
  • Increase water consumption on high-protein diets:
    If you must eat a diet rich in protein, then you'll need to make sure you drink 8 to 12 glasses of water daily.
  • Pay attention to dizziness or lightheadedness:
    If you notice that you become dizzy or light-headed while doing any outdoors activities, promptly stop what you're doing and rest in a cool environment.
Tip courtesy of WebMD

Improve Your Home Environment With Natural Lighting

Natural light can do wonders to brighten and freshen rooms. Studies show that sunshine also has many positive effects on the body. When exposed to sunlight, we can do everything from produce more serotonin to potentially heal faster from surgeries. By swapping out your artificial lights with natural lighting, you'll also decrease the amount you rely on electricity.

Here are some ways to improve natural lightning at home:
  • Keep Your Windows Clean:
    When dust and dirt collects on your window, it decreases the amount of light you let in. Be sure to keep the windows clean, so you maximize your sunlight.
  • Swap wood doors with sliding glass doors:
    Glass doors will allow additional light to come in, which can help you cut down on energy from light bulbs.
  • Paint your walls with lighter colors:
    Dark paint absorbs sunlight that comes in through the windows. Paint your walls with light colors to reflect sunlight and brighten your space.
  • Hang a large mirror:
    Install a large mirror on the wall opposite of a window. Doing so will double the amount of light and reflect it more deeply throughout the room.
Tip courtesy of Care2.com

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