Market Update: June 5, 2017

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Last Week’s Market Activity

  • Solid Friday and holiday-shortened week for stocks… and more record highs. S&P 500 gained +0.36% on Friday, +0.96% for the week to end at a record high (2439.07). Nasdaq led major averages Friday (+0.94%) and for the week (+1.54%). Small caps beat mid and large (Russell indexes).
  • Tech drove Friday’s gains, led by semis and software. Financials hit by lower rates and yield curve flattening post jobs miss. Energy was the biggest decliner on falling oil prices.
  • Weaker dollar helped COMEX gold Friday (+0.8%) but not WTI crude oil (-1.4%)
  • 10-year yield dipped 0.06% to 2.15%, lowest closing level of 2017 and lowest since just after the election
  • Friday miss on U.S. nonfarm payrolls unlikely to sway Fed next week (details below)
  • Defensive tilt to weekly performance. Telecom topped weekly sector rankings, followed by healthcare. Oil fell > 4%; 10-year Treasury yield dropped 0.10%.

Overnight & This Morning

  • Stocks in Asia mostly lower amid relatively light news
  • In Europe, shares down (Euro Stoxx 600 -0.2%), continuing Friday slide
  • Weak sentiment after more terrorist attacks in London over the weekend
  • Euro up 0.3% to $1.12
  • Commodities – Mostly lower, led by weakness in industrial metals and energy, with WTI oil near $47/bbl. COMEX gold (0.3%) adding to Friday’s gains at $1283, copper (-0.7%)
  • U.S. stock, Treasury yields up slightly.
  • U.S. dollar mixed vs major currencies

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Key Insights

  • Goldilocks environment. Steady but not booming job gains and inflation leveling off suggests economy is not too hot, not too cold. Wage gains are benign-average hourly earnings +2.5% YoY in Friday’s May jobs report. We’ve seen a mixed set of data recently: soft Q1 GDP, Q2 tracking near +3%, and earnings looking good. The Fed Beige Book cited most Fed districts continue to expand at a modest or moderate pace. Sounds like Goldilocks.
  • Any concern that the Fed may be behind the curve are misplaced, at least for now. The market is only pricing in a 44% chance of another rate hike in 2017 (after one in June), and just one hike in 2018.
  • An expensive stock market can stay expensive. The 17.7 times forward price-to-earnings (P/E) multiple, where it stood in early 2015, is more reasonable than the trailing PE (20.7) for the S&P 500 but is still at the high end of the historical range. We reiterate valuations are not good predictors of near-term stock market moves, an important message for clients.

Macro Notes

  • Jobs miss doesn’t mean Fed pause. The economy added 138K new jobs in May, well below consensus expectations of 185K, with additional downward revisions for March and April; unemployment rate edged lower to 4.3% from 4.4% on lower labor participation rate. The report may give the Fed some pause, but given the overall backdrop a June hike remains far more likely than not.
  • The China Caixin Manufacturing PMI index was below 50 when reported last week, but overnight the services PMI was 52.8, much better than last month’s 51.5. The overall composite number of 51.5 suggests a continued, but slowing, expansion in the Chinese economy. We expect the government to continue to try to reduce leverage in the economy, but not to engage in any major reforms until after the Communist Party meeting this fall.

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  • Politics and central banks highlight the week ahead. Politics and central banks highlight the coming week, with Thursday, June 8 of particular importance as it brings the U.K. general election, the European Central Bank (ECB) meeting, and testimony of former FBI Director James Comey. Data of note in the U.S. includes durable goods and Services Institute for Supply Management (ISM). Overseas, Eurozone and Japan Gross Domestic Product (GDP), and Chinese inflation and money supply data are due out.

Monday

  • Nonfarm Productivty (Q1)
  • Unit Labor Costs (Q1)
  • ISM Non-Mfg. Composite (May)
  • Factory Orders (Apr)
  • Durable Goods Orders (Apr)
  • Cap Goods Shipments & Orders (Apr)
  • UK: Markit/CIPS UK Services PMI

Tuesday

  • Eurozone: Markit Eurozone Services PMI (May)

Wednesday

  • Eurozone: GDP (Q1)
  • Japan: GDP (Q1)
  • Japan: Current Account Balance (Apr)
  • Japan: Trade Balance (Apr)

Thursday

  • Germany: Industrial Production (Apr)
  • UK: General Election, 2017
  • ECB: Draghi
  • Japan: Machine Tool Orders (May)
  • China: CPI & PPI (May)

Friday

  • Wholesale Sales & Inventories (Apr)
  • France: Industrial Production (Apr)
  • UK: Industrial Production (Apr)
  • UK: Trade Balance (Apr)
  • China: Money Supply and New Yuan Loans (May)

 

 

 

 

 

Important Disclosures: Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. This research material has been prepared by LPL Financial LLC

Market Update: May 8, 2017

MarketUpdate_header

  • Stocks in Asia were mostly higher with Nikkei & South Korea’s KOSPI surging +2.0% on positive vibes carrying over from U.S. jobs growth and Emmanuel Macron victory. South Korea’s election tomorrow looks to end a nine-year run for the ruling conservative party, which has been caught up in scandal. Hang Seng +0.4% while the Shanghai Composite slipped 0.8% to the lowest levels in more than six months amid Beijing’s efforts to rein in financial leverage.
  • European stocks are holding steady after opening down slightly and two strong weekly gains that essentially priced in the Macron victory. The broader Euro Stoxx 600 is up ~+9.0% YTD. The euro slipped -0.5% to 1.09, but note that the common currency has climbed in five of the past six days and has been trading near its highest levels of the past six months.
  • U.S. markets are slightly lower after the S&P 500 and Nasdaq closed Friday at record levels. The dollar is up +0.3% after four consecutive weekly declines. The 10-year yield is higher at 2.37%. Oil is holding on to $46/barrel and COMEX gold is up 0.3% after dropping more than 3% last week.

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French Elections

  • Macron victory essentially eliminates fears of worst-case scenarios: wave of populist victories threatening viability of currency and European Union (EU).
  • First election without either of two leading parties in Fifth Republic.
  • Still plenty of challenges–Macron must form alliances with Socialists, the party he left, to offset alt-right anger, potential lack of cooperation heading into parliamentary elections in June.
  • Euro-Stoxx 600 +2.0% last week and flat/down today.
  • Euro (~1.09) down 50 basis points today but stronger vs. dollar and other currencies past month.
  • Eurozone gross domestic product (GDP) and inflation both approaching +2.0% annual growth and this vote suggests trajectory can be maintained, accelerated with economic reforms in France.
  • European Central Bank (ECB) must remain accommodative near term, though, because Italy is the next challenge.

 Oil Prices

  • WTI fell -0.6% last week to $46/barrel as increased shale production in U.S. offsets Organization of the Petroleum Exporting Countries (OPEC) production cuts. To be sure, the announcement in November helped drive oil to ~$55, yet the increased profitability for higher cost producers in North America was evidently too good to pass up.
  • We expect OPEC to extend their production cuts at the next meeting in Vienna on May 25. Wall Street consensus is still bullish, projecting a range of $50-55/barrel over the next twelve months.
  • Recent sell-off largely technical in nature over supply concerns. WTI broke through 200-day moving average and failed to hold the new low for the year ($45) and a key Fibonacci retracement level. Frenzied trading in Asian markets ensued on Thursday, yet oil volatility was at its highest level in six months and relative strength (RSI) indicates oversold position.
  • “It’s different this time” – the U.S., not Saudi Arabia, is now the world’s swing producer and although OPEC has largely held on production cuts, U.S. rig counts are up.
  • We remain neutral on the energy sector as supply-demand adjustments still point toward a range of $50-$55 for WTI as OPEC cuts likely persist.

Earnings

  • Strong earnings season got even better last week. S&P 500 earnings for the first quarter rose more than 1% over the past week and are now tracking to a 14.7% year-over-year increase, compared with the 10.2% increase reflected in consensus estimates on April 1 (Thomson Reuters data). Both the earnings growth and beat rates (75%) are the best in more than five years. Excluding the rebounding energy sector, earnings are still on pace to grow a solid 10.5% year over year. About 40 S&P 500 companies will report results this week as earnings season winds down.

 

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  • Companies have delivered mostly upbeat guidance. Forward estimates inched fractionally higher last week and are down just 0.2% since earnings season began. Although the timetable for policy, particularly corporate tax reform, has been pushed out, we still see potential policy upside in 2018. The relatively bright outlook is helping support elevated valuations at an S&P 500 price-to-earnings ratio of 17.5 times.

Sell in May

  • Time to go away? The well-known “Sell in May and go away” period is upon us. Although this is one of the most widely known investment clichés out there, since 1950[1], historically the next six months are indeed the worst six months of the year for the S&P 500. So should you sell and wait to buy in November? We take a closer look at this cliché and show why it doesn’t always work and might not work this year.

Winning Streak

  • Up three weeks in a row. On Friday, the S&P 500 closed at its first all-time high since March 1 and in the process rose for the third consecutive week. It was also the first green Friday for the S&P 500 in nearly two months (March 10). This was the second three-week win streak of the year, with the earlier streak making it all the way to six weeks in a row (ending in early March). There hasn’t been a year with two separate six-week win streaks since 2013.

MonitoringWeek_header

Monday

  • Eurozone: Sentix Investor Confidence (May)
  • China: Foreign Direct Investment (Apr)
  • China: Trade Balance (Apr)

Tuesday

  • NFIB Small Business Optimism (Apr)
  • Germany: Industrial Production (Mar)
  • BOJ: Summary of Opinions at Apr 26-27 Meeting
  • China: New Loan Growth & Money Supply
  • China: Consumer Price Index (CPI) & Producer Price Index (PPI) (Apr)

Wednesday

  • Monthly Budget Statement (Apr)
  • ECB: Draghi Speaks

Thursday

  • Initial Jobless Claims (May 6)
  • PPI (Apr)
  • Eurozone: European Commission Economic Forecasts
  • UK: Bank of England Rate & Inflation Report
  • ECB: Publishes Economic Bulletin

Friday

  • CPI (Apr)
  • Retail Sales (Apr)
  • Germany: GDP (Q1 Prelim.)
  • Germany: CPI & PPI (Apr)
  • Eurozone: Industrial Production (Mar)

 

 

 

[1] Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.  

Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. This research material has been prepared by LPL Financial LLC.

Mark Cuban Says This Will Be the No.1 Job Skill in 10 Years

Study after study has shown that millions of jobs are at risk of becoming automated in the coming years.

And the U.S. is not prepared, says Mark Cuban, the billionaire software developer and owner of the Dallas Mavericks.

In a recent interview on Bloomberg TV, Cuban warned that even people with in-demand skills like computer coding could soon be displaced.

“That might have been a great job a few years ago, but you might be out of work in five years,” he said, citing what he called “the automation of automation,” where computers learn how to write software better than humans can.

“We’re going to have a lot of displaced workers — the nature of work is changing,” he said.

So a new skill will become more in-demand than it ever has been: creative thinking.

“I personally think there’s going to be a greater demand in 10 years for liberal arts majors than there were for programming majors and maybe even engineering,” he said. “When the data is all being spit out for you for you, options are being spit out for you, you need a different perspective in order to have a different view of the data.”

In particular, experts in philosophy or foreign languages will ultimately command the most interest from employers in the next decade, Cuban said.

Cuban went on to say that America should be investing in programs like Americorps, which leverages community-building and creative thinking to create social impact. But that type work isn’t always seen as valuable, Cuban said.

“Making it a real job…that’s what we’re going to need,” he said.

Written By: Rob Wile
Source: Money

Market Update: March 6, 2017

MarketUpdate_header

  • Equities move lower to begin week. U.S. stocks are moving lower in early trading, following their European counterparts on little news. The major averages all managed to squeak out slight gains on Friday; the S&P 500’s 0.1% gain was led by financials and healthcare, which both closed up 0.4%. Overnight in Asia, stocks finished mostly higher with the exception of Japan’s Nikkei (-0.5%) as the yen strengthened; the STOXX Europe 600 is lower by 0.5% in afternoon trading. Meanwhile, the yield on the 10-year Treasury is near flat at 2.48% as market-implied expectations of a Fed rate hike in March are near 86%, WTI crude oil ($53.25/barrel) is slightly lower, and COMEX gold ($1231/oz.) is climbing 0.4%.

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  • Brexit, EU summit, China forecasts, Fed “quiet period”, and February jobs report highlight week ahead. Other than the February employment report (due out this Friday, March 10)  it’s a relatively quiet week for U.S. economic data. It’s also the unofficial quiet period for the Federal Reserve ahead of the March 14-15 FOMC meeting. The overseas calendar is chock full of potentially market-moving events, including the EU leaders summit, a potential House of Lords vote on Brexit, the European Central Bank meeting, and a few key reports on China’s economy in February.
  • Beige Book. This week, we’ll examine the Fed’s latest Beige Book, looking for signs of any impact from the new Trump administration, an overheating labor market, rising wages, and inflation ahead of next week’s FOMC meeting.
  • Corporate sentiment improved again in our latest Corporate Beige Book. Sentiment improved among corporate executives based on our analysis of fourth quarter earnings conference call transcripts. Not surprisingly, policy was a popular topic, as corporate tax reform, infrastructure and regulation saw big jumps in the number of mentions. Currency and China also continued to garner a lot of attention, while energy and Brexit faded. The solid fourth quarter results coupled with improved sentiment from corporate executives support our expectation of mid-to-high single digit earnings growth for the S&P 500 in 2017.
  • The Chinese National People’s Congress began its annual meeting on Sunday. Nothing shocking has come out of the meeting so far, though little was expected. Official economic growth forecasts have been cut to 6.5%. The focus of the meeting has been on economic stability, including a reduction in monetary growth targets and efforts to reduce China’s bad debt problem. The most notable change in language related to calls for further currency liberalization. A more market-oriented currency policy suggests potential weakening of the yuan, which would run counter to China’s long-term political goals, as well as increase the likelihood of China being labeled a “currency manipulator” by the Trump administration.
  • Make that six in a row. The S&P 500 was up 0.7% for the second consecutive week, and managed to close at a new weekly all-time high. In the process, it closed higher for the sixth consecutive week for the first time since a six-week win streak off of the February 2016 lows. The last time it was up seven weeks in a row was late 2014. Here’s the catch, the S&P 500 was up only 4.9% the past six weeks – making this one of the weakest six-week win streaks ever. Given the historically small daily trading ranges recently, this shouldn’t come as a big surprise. You have to go back to late 2013 for the last time there was a smaller return during a six-week win streak.

MonitoringWeek_header

Monday

  • Kashkari (Dove)

 Tuesday

  • China: Imports and Exports (Feb)
  • Japan: Economy Watchers Survey

 Wednesday

  • ADP Employment (Feb)
  • China: CPI (Feb)

Thursday

  • Initial Claims (3/5)
  • Challenger Job Cut Announcements (Feb)
  • Household Net Worth and Flow of Funds (Q4)
  • European Union leaders Summit in Brussels Begins
  • Eurozone: European Central Bank Meeting (No Change Expected)

Friday

  • Employment Report (Feb)
  • European Union leaders Summit in Brussels Continues

 

 

 

 

 

Important Disclosures: Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. This research material has been prepared by LPL Financial LLC.

Market Update: February 27, 2017

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  • Stocks lower as busy week begins. Markets are lower this morning as investors evaluate mixed durable goods orders data and await several Fed speakers and President Trump’s address to Congress this week. Domestic stocks rallied at the end of the day on Friday, helping the Dow notch its eleventh consecutive gain; the S&P 500 was up 0.2%. Rate-sensitive utilities (+1.5%) and telecom (+0.7%) outperformed while energy (-0.9%) and financials (-0.7%) were the only sectors to lose ground. Overnight in Asia, the Nikkei (-0.9%) and Shanghai Composite (-0.8%) led broad declines in the region, while most European exchanges are modestly lower in afternoon trading, although Italy’s MIB (+1.5%) is bucking the trend.  Elsewhere, WTI crude oil ($54.38/barrel) is up 0.7%, COMEX gold ($1259/oz.) is near flat, and the yield on the 10-year Treasury note is up three basis points (0.03%) to 2.34%.

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  • Earnings season winds down this week. With 32 S&P 500 companies slated to report this week and 460 having reported already, this week effectively marks the end of fourth quarter earnings season. S&P 500 earnings growth for the quarter is tracking to solid 7.7% growth according to Thomson Reuters data, less than 2% above prior estimates, while revenue growth is tracking to a very respectable 4.3% increase. While fourth quarter upside is below average, the growth rate is a meaningful improvement from the 4% growth rate in the third quarter of 2016 and flat or negative growth for several quarters before that. Looking forward, the modest 1% drop in 2017 S&P 500 earnings estimates, which remain 10-11% above 2016 earnings, is an encouraging sign. We believe our mid- to high-single-digit S&P 500 earnings growth forecast for 2017[1] is achievable given our expectation for better economic growth and potential for a policy boost.

021717_earningsdashboard-011

  • Busy start to a very busy month. This is an incredibly busy week for economic data and events around the globe. In the U.S., President Trump will address a joint session of Congress on Tuesday night, and Fed Chair Yellen and Vice Chair Fischer will deliver speeches on Friday. In addition, there are half a dozen other FOMC members on the docket this week, and the Fed will also release its Beige Book Wednesday March 1 ahead of the March 14-15, 2017 meeting. In addition to that, data for January and February on ISM (manufacturing and non manufacturing), vehicle sales, and pending home sales are due out. Overseas, the U.K.’s House of Lords will begin debate on Article 50 (aka Brexit), China will release key data in manufacturing and service sector activity, and in Europe, February data on CPI and bank lending for January will be closely watched.
  • Durable goods order and shipments. Sizable upward revisions to prior months’ data offsets weaker than expected January reading. New orders for “core” durable goods fell 0.4% between December and January, but the December reading, initially reported as a 0.7% gain, was revised up to show a 1.1% increase instead. The durable goods data are notoriously volatile month-to-month and subject to large revisions.  Looking at changes over three months can help to smooth out some of the inherent volatility, and in the three months ending January 2017, core durable goods orders rose 9%, a clear acceleration from the 4% gain posted in the three months ending October 2016. The acceleration in orders in the past three months suggests that business capital spending is likely to be a plus for GDP in the first half of 2017.
  • Up five weeks in a row. The S&P 500 had a late-day surge on Friday to close higher for the fifth consecutive week for the first time since coming off of the February 2016 lows. Momentum seems to stay in play after long weekly win streaks, as the past 10 times the S&P 500 was up five consecutive weeks, it was higher two weeks later nine times. Under the surface though there was a unique development, as the Dow Jones Utility Average had its best week since early July – up 4.1%. In fact, since the bull market started nearly eight years ago, that type of weekly move happens only 2.9% of the time. Three of the four days last week saw utilities gain at least 1%, which hasn’t happened since October 2015. Historically, utilities taking the lead has been a warning sign, as defensive names find a bid.
  • Dow does it again. It took a nice-sized rally the last 20 minutes of the day, but the Dow eked out a gain of 0.05% on Friday. This was the eleventh consecutive record high, with only one streak longer since 1900 (12 in a row in 1987). In terms of any winning streaks, not just record highs, the current streak of 11 in a row is the most since early 1992.

MonitoringWeek_header

Monday

  • Durable Goods Orders and Shipments (Jan)
  • Dallas Fed Mfg. Report (Feb)
  • Kaplan (Hawk)
  • Eurozone: Money Supply and Bank Lending (Jan)
  • Germany: Retail Sales
  • UK House of Lords Begins Debate on Article 50

Tuesday

  • Chicago Area Purchasing Managers Report (Feb)
  • Richmond Fed Mfg. Report (Feb)
  • Williams (Dove)
  • Bullard (Dove)
  • Eurozone: CPI (Feb)
  • President Trump Addresses a Joint Session of Congress
  • China: Official Mfg. PMI (Feb)
  • China: Official Non-Mfg. PMI (Feb)
  • China: Caixin Mfg. PMI (Feb)

Wednesday

  • ISM Mfg. (Feb)
  • Vehicle Sales (Feb)
  • Beige Book
  • Kaplan (Hawk)
  • UK: Bank Lending and Money Supply (Jan)
  • Germany: CPI (Feb)
  • Canada: Bank of Canada Meeting (No Change Expected)

Thursday

  • Challenger Job Cut Announcements (Feb)
  • Mester (Hawk)
  • China: Caixin PMI Services (Feb)
  • Japan: Jobless Rate (Jan)

Friday

  • ISM Non Mfg. (Feb)
  • Yellen (Dove)
  • Fischer (Dove)

Sunday

  • China: National People’s Congress Meeting Begins in Beijing.

 

 

 

 

 

 

 

 

[1] We expect mid-single-digit returns for the S&P 500 in 2017 consistent with historical mid-to-late economic cycle performance. We expect S&P 500 gains to be driven by: 1) a pickup in U.S. economic growth partially due to fiscal stimulus; 2) mid- to high-single-digit earnings gains as corporate America emerges from its year-long earnings recession; 3) an expansion in bank lending; and 4) a stable price-to-earnings ratio (PE) of 18 – 19.

Important Disclosures: Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better. Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk. Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments. Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors. Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply. Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained. Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged. This research material has been prepared by LPL Financial LLC.

10 Founders Share What Their Worst Boss Taught Them

We’ve all had bosses that make us crazy — whether it was a supervisor with a big temper, one that watched your every move or the one that never knew what he wanted. But even if at the time it was frustrating or demoralizing, there is an upside: You’ll never catch yourself being that kind of manager.

We caught up with 10 successful entrepreneurs who shared with us the lessons they learned from the worst bosses they’ve ever had.

 

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1. COMMUNICATE CLEARLY

Name: Daniella Yacobovsky
Company: BaubleBar
Lesson: One of the things I have learned is to communicate openly and honestly with the folks you work with. Try to understand where their requests and feedback are coming from and be open to feedback. When you’re first starting and you’re a small company, it’s definitely easier to do. As you grow and have more people, it is a harder thing to scale but that doesn’t take away it’s importance.

 

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2. FOLLOW THE GOLDEN RULE

Name: Gavin Armstrong
Company: Lucky Iron Fish
Lesson: People who are bullies act that way because they are insecure about something else. They are very demeaning and not appreciative.

You want to be very respectful of people working with you. Remember they work with you, not for you. Be complimentary of their work, because they are putting a lot of time and effort into it.

 

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3. HAVE STRONG CONVICTIONS

Name: Merrill Stubbs
Company: Food52
Lesson: Being indirect about what you want or what you expect is a really terrible tactic for managing people. It makes them feel like the ground is shifting beneath them — that’s an impediment and distraction from people doing their best work.

 

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4. BE A MENTOR

Name: Melissa Ben-Ishay
Company: Baked By Melissa
Lesson: The importance of open communication. When I think of the worst boss I ever hard, I don’t think of just one person.

I didn’t have a mentor. I didn’t have someone who wanted me to succeed. I didn’t have someone who took the time to sit down, have a conversation with me and help me be better at my job. So now, I really make the effort to be clear and honest with my employees and sit down with them and communicate.

 

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5. FOLLOW THROUGH

Name: Oliver Kharraz
Company: Zocdoc
Lesson: I learned to only make promises that I can keep. I remember how upset I was when promises were made to me that were not kept, and I promised myself that I wouldn’t do that.

 

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6. CONNECT WITH EVERY EMPLOYEE

Name: Jennie Ripps
Company: Owl’s Brew
Lesson: I learned how important it is to engage with my own team and also to ensure that there is buy-in across the board at an individual level.

 

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7. LEAVE YOUR EGO AT THE DOOR

Name: Tim Chen
Company: Nerdwallet
Lesson: Ego gets in the way of success. I worked at a hedge fund that had a real “Lord of the Flies” feeling. It was pretty crazy. The problem with ego is the best ideas don’t win, because you have trouble facing the truth.

 

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8. TREAT EVERYONE WITH RESPECT

Name: Kyle Hill
Company: HomeHero
Lesson: The worst boss I had was actually a soccer coach I had in high school. I wouldn’t say he was a bad coach, but he yelled at me a lot. I realized that was something I could not handle. So my dad ended up pulling me from the team. I didn’t understand it at the time. I thought it wasn’t a big deal, and I had a tough skin.

But my dad was adamant about this, he said, “I don’t want people talking down to you because it hurts your self confidence. I need you to have the highest self confidence going into in everything you do in life; otherwise you’re not going to want to do it.”

I think it lends itself to being treated with respect and dignity. My dad said, “You can be stern, you can bench my son, you can take him aside and tell him what he needs to improve on. But don’t publicly reprimand him.”

Even to this day, I tell people, “If you’re upset with me, whether it’s my co-founder or an employee, talk to me like an adult.”

 

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9. DON’T STAND IN THE WAY OF INNOVATION

Name: Bastian Lehmann
Company: Postmates
Lesson: One thing I try to do is help the people that want to do more. I want to help them realize that when they are at Postmates.

The worst boss I ever had told me that I couldn’t do that. He was weak and afraid someone was more hungry than him. When I saw someone trying hard, and they gave it everything they had, that someone would not give them guidance and help them succeed.

 

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10. HAVE A CLEAR VISION

Name: Heidi Zak
Company: Thirdlove
Lesson: The one thing I’ve noticed from having different types of bosses is that the best ones have a clearly articulated vision of what the team is working toward. You have to communicate it effectively and do it often. That’s what I try to do; you can’t say it too often.

 

 

 

Written by: Nina Zipkin

Source: Entrepreneur

Market Update: Monday, October 10, 2016

LPL Financial Research

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  • Global markets move up to start week. U.S. equities are trading higher this morning amid gains overseas following a lackluster session on Friday which saw the S&P 500 shed 0.3% as traders digested the nonfarm payrolls report; materials and industrials led to the downside while only healthcare and financials managed slight gains. Overseas, both Europe and Asia are higher, with China’s Shanghai Composite (+1.5%) setting the tone overnight as it posted its largest gain in two months following a week-long holiday and a move by the country’s central bank to reset the renminbi’s peg to the dollar at its lowest point since 2010. Germany’s DAX (+1.1%) and France’s CAC (+0.9) indexes are leading widespread gains in Europe following better-than-expected trade data. Elsewhere, WTI crude oil is adding more than 2%, moving above $51/barrel, after comments out of Russia supporting a global supply cut. COMEX gold is up 0.8%, and the

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How Sunday Stopped Being Special for the American Worker

Sometimes it's harder to come to work than other times.
Gilbert R. Boucher II/Daily Herald via AP

This month, workers who have been with Walmart for at least five years received a one-time bump in their pay checks. A couple hundred extra dollars is usually welcome, but this time, it actually symbolizes a loss: No longer will those workers receive premium pay for their Sunday shifts, as the idea of compensating people for toiling on what some consider a day of rest fades from American business.

Walmart discontinued Sunday premium pay, which had been $1 extra per hour, for new hires back in 2011. Those who had continued to receive it will receive a lump sum equal to half the amount of Sunday pay they received last year, according to a company release in January outlining a handful of adjustments that Walmart explained were a way of “simplifying its pay structure” — and reducing the overall cost of increasing base wages to $10 an hour across the board.

That hasn’t worked worked out so well for more experienced employees like 8-year Walmart veteran Nancy Reynolds, a 69-year-old cashier in Cape Canaveral, Fla., who works Thursday through Tuesday. Her base pay was already slightly above $10 an hour, so she didn’t get much of a raise, and the loss of a few extra Sunday dollars a week will hurt. “The younger people, the ones who haven’t been there that long, they got it, and I’m glad for them,” Reynolds says. “But they did it at the expense of me and everybody who’s been there a long time.”

In cutting Sunday pay, Walmart is actually behind most of the retail industry, which made that change as legal requirements to pay more on Sundays were stricken from state laws across the country. So-called “blue laws” once prohibited Sunday commerce altogether in 34 states in the 1960s. They were often weakened through compromise, with higher pay mandated in exchange for shopping being legalized. Even with no mandate, premium pay was often what the labor market demanded.

“To get people to work, when they’d never worked before, they started to pay Sunday pay,” says Craig Rowley, a retail compensation consultant with Korn Ferry who has done work for Walmart.

That changed over time as women entered the workforce, pushing more shopping from weekdays to the weekend. The labor market also loosened up, meaning workers couldn’t pick and choose which days they wanted to work; Sunday shifts are now expected rather than optional. And meanwhile, the importance of Sunday as a universal day of rest started to recede from the American psyche.

“When I was growing up, Sundays were kind of family day, church day,” Rowley says. “As we’ve gotten to be a more secular society, staying at home on Sunday is not necessarily expected. ‘We’re all going to be here all day Sunday’ is not as strong a cultural norm.”

Rhode Island and Massachusetts are now two of the last states to require retailers to pay time and a half on Sundays, and the retail industry is pushing hard to get the requirement rolled back in Massachusetts. “Sundays in retail have become unaffordable in our state,” wrote William Rennie, vice president of the Retailers Association of Massachusetts, in a Boston Globe op-ed.

Sunday premium pay hasn’t disappeared as quickly from other sectors, such as manufacturing and transportation, which have held on to a more traditional five or six-day work schedule. Most federal employees are still entitled to time and a half on Sundays. But more and more of their neighbors in the private sector won’t be so lucky.

Written by Lydia DePillis of The Washington Post 

(Source: The Washington Post)

 

Company Ordered to Pay Back Wages for Bathroom Breaks

  
Stuart Dee/Getty Images 

A publishing company near Philadelphia has been ordered by a judge to pay back wages – possibly up to $1.75 million — to more than 6,000 employees after it neglected to pay for bathroom or other short breaks, according to a statement released by the Department of Labor Monday.

American Future Systems, also known as Progressive Business Publications, violated the Fair Labor Standards Act by docking its telemarketers’ wages “for virtually all time not spent making sales calls, sometimes bringing their wages below the federal minimum wage,” the DOL said. The federal minimum wage for nonexempt employees is $7.25 per hour for all hours worked, plus time and a half for hours worked beyond 40 per week.

While the exact amount has not been determined, the DOL estimates that Progressive and its president, Edward Satell, “are liable for at least $1.75 million in back wages and liquidated damages to more than 6,000 employees who worked in 14 call centers” for violations occurring through June 2013.

“Our company has a liberal break policy of allowing our telemarketers to choose unpaid breaks anytime, for any reason, for as long as they want,” Satell said Tuesday. “This flex work policy was greatly valued by many of our employees to handle their personal needs.”

Satell said he will appeal the decision, issued by a judge in the U.S. District Court for the Eastern District of Pennsylvania on Dec. 16, 2015. “If upheld, we’d have to discontinue this generous policy,” Satell said. “We have very good legal reasons to be hopeful that the court will reverse the ruling.”

“For far too long, American Future Systems penalized its employees for taking breaks to meet the most basic needs during the work day — stretching their legs, getting a glass of water or just using the restroom,” said Jim Cain, district director for the department’s Wage and Hour Division.

Investigators from the division found that PBP telemarketers had to clock in and out for every break, “even those as short as two to three minutes,” the DOL said. PBP deducted the break time from the total hours worked each week.

The Fair Labor Standards Act does not require lunch or coffee breaks. “However, when employers do offer short breaks (usually lasting about 5-to-20 minutes), the law considers the breaks compensable work hours that must be included in the sum of hours for the work week and considered in determining overtime,” the DOL said.

Progressive Business Publications, founded in 1959 and based in Malvern, Pa., publishes and sells primarily business newsletters.

Written by Roger Yu of USA Today

(Source: USA Today)

Weekly Market Recap: August 17, 2015

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The week in review

  • Job openings decreased to 5.25M
  • Retail sales increased 0.6%m/m
  • Import prices were down 0.9%m/m
  • PPI increased 0.2%m/m
  • Industrial production jumped 0.6%m/m

The week ahead

  • HMI
  • Housing starts
  • CPI
  • Existing home sales
  • Philly Fed
  • Flash PMI

For the full report, please click on the source link below.

(Source: JP Morgan)